Reviewer in Sales

2011 ADRIENNE O. ESPARES

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. Causes for extinguishment of sale 1. Common Those causes which are also the means of extinguishing all other contracts like payment, loss of the thing, condonation, etc. (see Art.1231); 2. Special Those causes which are recognized by the law on sales (such as those covered by Arts. 1484, 1532, 1539, 1540, 1542, 1556, 1560, 1567, and 1591); and 3. Extra-special Those causes which are given special discussion by the Civil Code and these are conventional redemption and legal redemption. 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. Conventional redemption It is the right which the vendor reserves to himself, to reacquire the property sold provided he returns to the vendee the price of the sale, the expenses of the contract, any other legitimate payments made therefor and the necessary and useful expenses made on the thing sold and fulfills other stipulations which may have been agreed upon. Subject matter of conventional redemption Both real and personal property may be the subject matter of pacto de retro sales or sales with right to repurchase although there are certain articles (Arts. 1607, 1611, 1612, 1613, 1614, 1617, 1618) which are applicable only to immovables. Nature of conventional redemption 1. It is purely contractual because it is a right created, not by mandate of the law, but by virtue of an express contract. 2. It is an accidental stipulation and, therefore, its nullity cannot affect the sale itself since the latter might be entered into without said stipulation. 3. It is a real right when registered, because it binds third persons. 4. It is potestative because it depends upon the will of the vendor.

5. 6. 7.

8.

9.

It is a resolutory condition because when exercised, the right of ownership acquired by the vendee is extinguished. It is not an obligation but a power or privilege that the vendor has reserved for himself. It is reserved at the moment of the perfection of the contract for if the right to repurchase is agreed upon afterwards, there is only a promise to sell which produces different rights and effects and is governed by Art. 1479. The person entitled to exercise the right of redemption necessarily is the owner of the property sold and not any third party. The right may be exercised also by any person in whom the right may have been transferred. It gives rise to reciprocal obligation that of returning the price of sale and other expenses, on the part of the vendor (Art.1616); and that of delivering the property and executing a deed of sale therefor, on the part of the vendee.

Option to buy and right of repurchase y The right of repurchase is not a right granted the vendor by the vendee in a subsequent instrument, but a right reserved by the vendor in the same instrument of sale as one of the stipulations of the contract. y Once the instrument of absolute sale is executed, the vendor no longer reserves the right to repurchase, and any right thereafter granted the vendor by the vendee in a separate instrument cannot be a right of repurchase, but some other right like the option to buy. o Accordingly, a deed of absolute sale and an option to buy together, cannot be considered as evidencing a contract of sale with pacto de retro. Such option does not evidence a right to repurchase, the extension of the period for the exercise of which (option) does not fall under No. 3 of Art. 1602. o Similarly, an agreement to repurchase becomes a promise to sell when made after an absolute sale because where the sale is made without such an agreement, the purchaser acquires the thing sold absolutely, and if he afterwards grants the seller the right to repurchase, it is a new contract entered into by the purchaser, as absolute owner already of the object. Right to redeem and right of repurchase 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 repurchase.
AQ LAW

1|P ag e

1602. the purchaser may or may not re-sell the property but no law will compel him to do so. 1602. of foreclosed property. Such 2|P ag e AQ LAW . An escalation of purchase price every month stipulated is an equitable mortgage. he is not bound by the bid price. 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. When the purchaser retains for himself a part of the purchase price. forms or words or other requisites prescribed by law for a mortgage. it is entirely within his discretion to set a higher price. 6. ESPARES Distinction must be made because redemption is by force of law. and 2. When the price of a sale with right to repurchase is unusually inadequate. A pacto de retro sale may be deemed an equitable mortgage where it appears that it was executed due to the urgent necessity for money of the vendor. the purchaser at public auction is bound to accept redemption. Pacto de retro and mortgage Pacto de retro Mortgage Ownership is transferred Ownership is not but the ownership is transferred but the subject to the condition property is merely subject that the seller might to a charge or lien as recover the ownership security for the within a certain period of compliance of a principal time obligation. for after all. imposes no such obligation. in any of the following cases: 1. The contract shall be presumed to be an equitable mortgage. 4. the mortgagor has a right to redeem Subsequent sale of property by vendor a retro The sole right of the vendor under a pacto de retro agreement is that of redemption. 5. The stipulation in pacto de retro sale that the ownership over the property sold would automatically pass to the vendee in case no redemption was effected within the stipulated period. In any of the foregoing cases. But a sale subsequently made by the vendor to an innocent purchaser for value could defeat the vendee¶s title and right to possession if the latter¶s right is not properly registered or annotated. Equitable Mortgage It is one which lacks the proper formalities. He has no other interest left in the property which he can transfer. 2 Requisites for a presumption of an equitable mortgage to arise 1. The ³pacto de retro´ problem The policy of the law is to discourage pacto de retro sales and thereby prevent the circumvention of the prohibition against usury and pactum commissorium. And. Art. After expiry. 3. 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.Reviewer in Sales 2011 ADRIENNE O. however. That their intention was to secure an existing debt by way of mortgage. after redemption period. 1 to 5 of Art. That the parties entered into a contract denominated as a contract of sale with a right of repurchase or purporting to be an absolute sale. Inadequacy of price is not sufficient to set aside a sale unless it is grossly inadequate or purely shocking to the conscience. any money. 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. Intention to execute mortgage may be fairly inferred A contract should be construed as a mortgage or a loan instead of a pacto de retro sale when its terms are ambiguous or when other circumstances rather than any of the specific cases in Nos. and after the maturity of the debt secured by the mortgage and before foreclosure. subject only the vendor¶s right of redemption. neither does the vendor have any right to redeem the property after the maturity of the debt the debt at its maturity It is the duty of the mortgagee to foreclose the mortgage if he wishes to secure a perfect title thereto. or is such that the mind revolts at it and such that a reasonable man would neither directly nor indirectly be likely to consent to it. is contrary to the nature of a true pact de retro sale under which the vendee acquires ownership of the thing sold immediately upon the execution of the sale. the property already belongs to him as owner. fruits or other benefits to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws. When the vendor binds himself to pay the taxes on the thing sold. When the vendor remains in possession as lessee or otherwise. Repurchase. usually a loan If the seller does not The mortgagor does not repurchase the property lose his interest in the upon the very day named property if he fails to pay in the contract. may be indicative that the real intention of the parties is to enter into a contract of loan with mortgage. 2. he loses all interest thereon There is no obligation resting upon the purchaser to foreclose.

the period cannot exceed 10 years. the vendor may still exercise the right to repurchase within 30 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. 1606 refers to conventional redemption. Art. ³Pacto de retro´ sales not favored Sales with a right to repurchase are not favored. Where the agreed period exceeds 10 years. 1603. When a contract purporting to be sale with a right to repurchase is held as an equitable mortgage. cannot. 3. The provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale. it is not an unconscionable one. ESPARES presumption is also true when the vendor borrowed from vendee money used in buying a property. the right to redeem must be expressly stipulated in the contract of sale in order that it may have legal existence.2088). the right to repurchase the thing sold. The right referred to in article 1601. that the contract is an equitable mortgage may be overcome by proof to the contrary. and the contract will be construed as a mere loan unless the court can see that. In the cases referred to in articles 1602 and 1604. are not favored. the same may be reformed so that the contract should appear to be a mortgage and not an absolute sale or a pacto de retro sale. however. prevail over a subsequent registered mortgage. the vendor a retro has 10 years from the execution of the contract to exercise his right of redemption. 2. 1604. 1606. However. y Where there has been no meeting of the minds. y Thus. Presumption in case of doubt Whether the sale is absolute or pacto de retro. The title to the mortgaged property which had been transferred to the supposed vendee actually remained or is transferred back to the supposed vendor as ownermortgagor conformably to the wellestablished doctrine that the mortgagee does not become the owner of the mortgaged property because the ownership remains with the mortgagor (Art. then the redemption period is 10 years. If the parties agreed that the vendor shall have a right to redeem and they intend a period which. in the absence of an express agreement. the contract appears to be a genuine sale with right of repurchase (or an absolute sale) and none of the suspicious circumstances mentioned in Article 1602 is present. The equitable mortgage while valid as between the immediate parties thereto. however. Art. the remedy is annulment. 3|P ag e AQ LAW . in no uncertain terms.Reviewer in Sales 2011 ADRIENNE O. it shall be presumed to be an equitable mortgage even if only one of the circumstances mentioned in Article 1602 is present. the same shall be given effect as if it has complied with the formal requirements of mortgage. the apparent vendor may ask for the reformation of the instrument. shall last four years from the date of the contract. Art. Reformation The remedy granted by law by means of which a written instrument is made or construed so as to express or conform to the real intention of the parties when such intention is not expressed in the instrument. if enforced according to its terms. a contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage. y If the parties really intended a mortgage but the instrument states that the property is sold absolutely or with a right of repurchase. This is so because pacto de retro sales. It does not apply where the contract is not one of sale with right of repurchase. Should there be an agreement. Art. with the stringent and onerous effects that accompany them. the true agreement will be upheld. If from all indications. Art. The proper remedy to enforce a transaction declared to be a mortgage is not an action for consolidation of ownership but to foreclose the mortgage and sell the property at public auction. then the period of redemption shall be 4 years from the date of the contract. 4. Effect where contract held as an equitable mortgage 1. there is no right of redemption since the sale should be considered an absolute sale. For conventional redemption to take place. is not specified. If the parties agreed only on the right to redeem on the part of the vendor but there is a total absence of express stipulation as to the time within which the repurchase should be made. the vendor should reserve. If there is no agreement in a contract of sale granting the vendor the right to redeem. 1605. however. The presumption. In case of doubt.

Art. ESPARES The 30-day period is peremptory because the policy of the law is not to leave the purchaser¶s title in uncertainty beyond the said period. The needed judicial hearing contemplated by Article 1607 refers not to the consolidation itself. the date from which the period must be counted is the date of the contract. The vendor may bring his action against every possessor whose right is derived from the vendee. After expiration of period of redemption It is legally impossible to speak of extension because that which is extinguished cannot be extended and because the ownership in the vendee is already consolidated. It is plain from Article 1607 that the acquisition of ownership by a vendee a retro is automatic. The determination of the right of redemption may be made to depend upon the delinquency of the vendor. But to actually redeem. The purpose is not only to have all doubts over the true nature of the transaction speedily ascertained and decided. Reason for limiting period of redemption A long term for redemption renders the tenure of property uncertain and redounds to its detriment. including the original term. once there is failure to redeem within the stipulated period. the consolidation of ownership in the vendee by virtue of the failure of the vendor to comply with the provisions of Article 1606 shall not be recorded in the Registry of Property without a judicial order. be payment or consignation. the allegation that the offer to redeem was not sincere because there was no consignation of the purchase price is devoid of merit. Thus. par. the vendee¶s title becomes irrevocable but the consolidation of ownership in the vendee shall not be recorded in the Registry of Property without a judicial order and until after the vendor has been duly heard. 2. Action to consolidate ownership The consolidation shall be effected through an ordinary civil action cognizable by the RTC wherein the vendor a retro is made a party defendant. Effect of failure to comply with the requirement The only effect of the failure of the vendee a retro to comply with Article 1607 is that the absolute ownership of the vendee a retro cannot be recorded in the Registry of Property.Reviewer in Sales 2011 ADRIENNE O. Any other interpretation would be violative of the sanctity of the contract between the parties. It is not a prescriptive period but is more a requisite or condition precedent to the exercise of the right of legal redemption. for the redemption of the property sold by the vendor. The petition to consolidated ownership under Article 1607 does not partake of the nature of a motion.e. therefore. Date from which period reckoned Under paragraphs 1 and 2 of Article 1606. Judicial order for recording of consolidation of ownership If real property is involved and the vendor failed to redeem within the period agreed upon. it not being merely an incident to an action or proceeding. there must. even if in the second contract no mention should have been made of the right to repurchase. after the vendor has been duly heard. Validity of penal clause providing automatic termination of redemption period In a contract of sale with pacto de retro. The date of the contract referred to must be that from which the contract produces its effects. ownership of the property sold becomes vested or consolidated by operation of law on the vendee. Effect of stipulation extending period of repurchase 1. not applicable It is not applicable where the contract is found to be an absolute deed of sale. pure and simple. In case of real property. but merely for the purpose of registering the consolidation or the consolidated title. and becomes absolute. There could not even be period of redemption. without prejudice to the provisions of the Mortgage Law and the Land Registration Law with respect to third persons. of course. i. It does not impair his title or ownership for the method prescribed under Article 1607 as it is merely for the purpose of registering the consolidated title. consignation (Art. 1608. the extension is void as to the excess. but also to prevent the interposition of buyers in good faith while such determination is being made. not an obligation.. and a judgment becomes final after the period to appeal had lapsed without one having been perfected. Neither is said provision applicable where the sale is admittedly one with pacto de retro. otherwise. Art. 1607. The right to redeem is what it is: a right. Under paragraph 3 of Article 1606. Before the expiration of the period of redemption The original term may be extended provided that the extension.3. The reason is that the transaction may not be a genuine pacto de retro but only an equitable mortgage. not in excess of 10 years.1256) is not required to preserve the right to redeem. it has been held that the period to redeem is reckoned from the time the judgment becomes final. AQ LAW 4|P ag e . the parties may legitimately fix any period they please. When article 1606. shall not extend beyond 10 years.

If the vendee should leave several heirs. does not make him the owner of all of it. whether ordinary or preferred. Similarly. In a sale with a right to repurchase. and title in the vendee a retro had been consolidated. Exception: The provisions of the Mortgage Law and the Land Registration Law with respect to third persons. and the vendee cannot compel him to redeem the whole property. 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. ignoring the rights of the vendee. 1615. Art. 1613. if the latter wishes to make us of the right of redemption. should sell an undivided immovable with a right of repurchase. 1610. and should they fail to do so. 1609. Art. mortgage the property. Redemption against heirs o vendee The vendor a retro can exercise the right to redeem against the heirs of the vendee a retro with respect 5|P ag e AQ LAW . shouldering the expenses therefor. Redemption in joint sale by co-owners/co-heirs of undivided immovable The co-owners of an undivided immovable sold by them jointly or collectively and in the same contract with the right to repurchase. This article refers to all kinds of creditors. The creditors of the vendor cannot make use of the right of redemption against the vendee. since it does not encourage the improvement of the property co-owned. Art. the co-heirs of the vendor of an undivided immovable can exercise the right of redemption only for the respective portions they have inherited. Art. recover the property against every possessor. until after they have exhausted the property of the vendor. This is to prevent injustice. may transfer or alienate his right to a third person. except those in whose favor exists a mortgage or antichresis upon the very property sold recorded prior to the sale. refused to vacate the property. the action for redemption cannot be brought against each of them except for his own share. They need not exhaust. In the case of the preceding article. or it has been partitioned among them. Of course. in which case each of the latter may only redeem the part which he may have acquired. whether the thing be undivided. the vendee cannot be compelled to consent to a partial redemption. the action for redemption may be instituted against him for the whole. ESPARES The right to repurchase is of a real character and should not be considered personal. he may require all the vendors or all the heirs to redeem the entire property or to agree to its redemption by any one of them. may independently exercise the right of repurchase as regards his own share. All these latter creditors have to do is to foreclose their rights. and the thing sold has been awarded to one of the heirs. Effect of redemption by co-owner of entire property The redemption by a co-owner of the property in its entirety. Art. for example. The vendee a retro can refuse partial redemption. jointly and in the same contract. 1611. Right to eject vendor Prior possession by the vendee a retro of the property is not a condition precedent in an unlawful detainer action against the vendor a retro who after having failed to redeem. The vendee is subrogated to the vendor¶s rights and actions. The above article is logical because a pacto de retro sale transfers ownership to the vendee although subject to the condition of repurchase. The same rule shall apply if the person who sold an immovable alone has left several heirs. the vendor cannot transfer ownership if he is not the real owner. Subrogation transfers to the person subrogated the credit with all the rights thereto appertaining. 1612. This means that the vendor a retro cannot exercise his right of redemption against a subsequent transferee for value and in good faith if his right is not properly registered or annotated. may compel the vendor to redeem the whole property. 1614. If several persons. The purpose of this article is to discourage coownership which is recognized as undesirable. Art. it does not put to end the existing state of co-ownership. Each one of the co-owners of an undivided immovable who may have sold his share separately. Art. and perform all other acts of ownership subject only to the right of redemption of the vendor. the vendee of a part of an undivided immovable who acquires the whole thereof in the case of article 498. can exercise such right only as regards their respective shares.Reviewer in Sales 2011 ADRIENNE O. As owner. none of them may exercise this right for more than his respective share. the vendee. In other words. enjoy the fruits thereof. But if the inheritance has been divided.

and in addition: 1. if by partition the entire property has been adjudicated to one of the heirs. for the parties to agree that the price to be returned will be more or less than the original sum paid by the vendee. however. to repurchase. if no indemnity was paid by the purchaser when the sale was executed. stands as the debtor and the vendee as the creditor of the purchase price. They may be paid later. the same shall be reimbursed by the vendor. ESPARES only to their respective shares. The law requires that the offer must be a bona fide one and accompanied by an actual and simultaneous tender of payment or consignation of the full amount agreed upon for repurchase. The same is true of necessary and useful expenses. If the tender is made after the period of repurchase has expired. 6|P ag e AQ LAW . The expenses of the contract. otherwise. Expenses of contract and other legitimate expenses If the expenses for the execution and registration of the sale were paid by the vendee. in a sense. whether the thing be undivided or it has been partitioned among them. However. Obligation of vendor a retro in case of redemption He must return to the vendee a retro: 1. visible or growing fruits. The vendor a retro must pay for the useful improvements introduced by the vendee a retro. The necessary and useful expenses made on the thing sold. not an obligation. He ha a right. the effect of the judgment is to definitely fix the relation of the vendor a retro and the vendee a retro. Offer to redeem and tender of payment generally required The mere declaration of the vendor of his intention to exercise the right of repurchase is not sufficient to preserve the right of redemption. The necessary expenses which must be repaid to the vendee are not those which are ordinary and simple expenses of preservation because these expenses are incident to the enjoyment of the thing and should be borne by the vendee. and any other legitimate payments made by reason of the sale.Reviewer in Sales 2011 ADRIENNE O. 1616. Useful expenses are refunded to the vendee a retro because he is considered a possessor in good faith. respectively. Art. Necessary expenses They are the expenses incurred for the preservation of the thing or those which seek to prevent the waste. 2. the vendor can exercise the right to redeem against said heir for the whole. the latter may retain possession of the land until reimbursement is made. unlike that granted the owner of a land under Articles 546 and 547 of the CC. Neither is it necessary to tender payment of the repurchase price if the vendee has already flatly refused to reconvey. Price The law speaks of ³price of the sale´ and not the value of the thing. It is lawful. deterioration or loss of the thing. as that of debtor and creditor. Should the vendee (creditor) refuse to accept the amount of the redemption price offered. Where the right of the vendor a retro to repurchase had been judicially declared to exist. 2. The vendor cannot avail himself of the right of repurchase without returning to the vendee the price of the sale. He is not a debtor. in the amount and within the period fixed in the judgment. If at the time of the execution of the sale there should be on the land. In case of absence of the vendee a retro The right of redemption may still be exercised as a vendor who decides to redeem a property sold with pacto de retro. its acceptance would amount only to a promise to sell on the part of the vendee because the right of repurchase having expired. 1617. Consignation of price generally not required It is not a legal requisite for the vendor to make a consignation or judicial deposit of the price if the offer or tender is refused. Useful expenses They are those which increase the value of the thing or create improvements thereon. there shall be made no reimbursement for or prorating of those existing at the time of redemption. although consignation may serve to provide additional security for the vendor and to indicate the veracity of his desire to exercise the right of repurchase. But they need not be paid at the very time of the exercise of the right since they are unknown amounts. the vendor (debtor) must deposit it in court. It is enough that a sincere and genuine tender of payment is made and refused. Art. The vendor a retro is given no option to require the vendee a retro to remove the useful improvements on the land subject of the sale a retro. there was no more right that could have been preserved.

the vendee a retro is obliged to redeem the mortgage. AQ LAW 7|P ag e . is also applicable if there were fruits at the time of the sale and the vendee paid for them. Right of vendor a retro to recover thing sold free from charges The vendee a retro may alienate. As such the essential elements of a contract of sale. 2. consisting of extensions of the redemption period granted at the request of the vendors followed by commitment by them to pay the redemption price at a fixed date. 1618. and cause or consideration must be present. all acts done by him are also revocable. Here. it cannot take place in barter and in the transmission of property by hereditary title. However. If there were fruits at the time of the sale and the vendee paid for them. 1619. upon the same terms and conditions stipulated in the contract. Thus. What actually takes place in dacion en pago is an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale. The law. giving the latter the part corresponding to the time he possessed the land in the last year. there shall be no reimbursement for those existing at the time of redemption. Civil fruits are deemed to accrue daily and belong to the vendee in that proportion. The exception is dictated by public convenience in the interest of agriculture. Transfer of ownership by onerous title Subrogation transfers to the person subrogated the rights pertaining to another. and some exist at the time of redemption. however. If the property had no fruits at the time of the sale and some exist at the time of redemption. but he shall respect the leases which the latter may have executed in good faith. The concept of legal redemption may be converted into one of conventional redemption.Reviewer in Sales 2011 ADRIENNE O. they shall be apportioned proportionately between the redemptioner and the vendee. ESPARES Should there have been no fruits a the time of the sale. he may borrow money and mortgage the property but when the vendor a retro redeems. The vendor has the right to receive the property in the same condition in which it was at the time of the sale. they shall be prorated between the redemptioner and the vendee. or by any other transaction whereby ownership is transmitted by onerous title. 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 expense. The right applies to both movable and immovable property. The vendor who recovers the thing sold shall receive it free from all charges or mortgages constituted by the vendee. it was held that the concept of legal redemption is converted by the parties into one of conventional redemption such that it generated binding contracts when approved by the vendee. Nature of dation in payment The undertaking partakes in one sense of the nature of sale. The same rule. in the place of one who acquires thing by purchase or dation in payment. If no indemnity was paid by the vendee for the fruits. object certain. the debtor offers another thing to the creditor who accepts it as equivalent of payment of an outstanding debt. namely. Example: Where there was voluntary agreement of the parties. or perform other acts of ownership over the thing sold. Legal redemption may take place not only in purchase or dation in payment but in any other transfer of ownership by onerous title. It refers only to natural and industrial fruits. 1. encumber. 3. Basis and nature of right of legal redemption The nature of conventional and legal rights of redemption is identical. the period of redemption is that agreed upon by the parties. except from the voluntary agreement of the parties. he must be reimbursed at the time of redemption as the payment forms part of the purchase price. legal redemption proceeds from law. Art. LEGAL REDEMPTION Art. and in accordance with the customs of the place where the land is situated. established 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. Legal redemption is the right to be subrogated. Right of parties as to fruits of land This article applies only when the parties have not provided for any sharing arrangement with respect to the fruits existing at the time of redemption. In such case. Dation in payment or dacion en pago It is the transmission of the ownership of a thing by the debtor to the creditor as the accepted equivalent of the performance of an obligation. But his ownership being revocable upon redemption. while the debt is considered as the purchase price. consent. counted from the anniversary of the date of the sale. The right is also not available where there is only a mortgage or lease. it is believed.

Instance: Should any of the heirs sell his hereditary right to a stranger before partition. 1620. There must be alienation of all or of any of the shares of the other co-owners. any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the purchase price. 4. and 4. Co-owners have no right of legal redemption against each other to whom the law grants the same privilege. Right of legal redemption of co-owner 1. Under special laws. Repurchase by homesteader of homestead sold under the Public Land Act. provided it be done within the period of 1 month to be counted from the time they were notified in writing of the sale by the vendor (Art. It works only one way in favor of the redemptioner. are sold to a third person. The right can no longer be invoked where there had been an actual partition of the property so that coownership no longer exists. It is intended to minimize co-ownership. 2. Not having parted with anything. 1620 and 1623. 3. 2. the redemptioner shall pay only a reasonable one. ESPARES The right of legal redemption is not predicated on propriety right but on a bare statutory privilege to be exercised only by the person named in the statute. its approval by the court relates back to the date of the plan. but only against a third person. If the price of the alienation is grossly excessive. The period is within 1 year from the date of sale. When right cannot be invoked The right cannot be invoked where the sale was made after the properties owned in common had been partitioned. Redemption by mortgagor after mortgaged property has been judicially foreclosed and sold. Redemption by owner of real property sold for delinquent taxes. If a plan of partition has been agreed upon though not approved at the time of the sale. The period is 5 years. 1634 and 1088. he can compel the purchaser to sell. but cannot be compelled by him to buy. There is no legal redemption in case of a mere least. The provision covers the case where son or one of the co-owners sell(s) their/his share(s) in the property owned in common but not the case where all the coowners have sold their shares. This right has priority over any other right of redemption. 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. There must be co-ownership of a thing. as being a hindrance to 3. the co-heirs turn into co-owners and their right of legal redemption should be governed by Arts. The sale must be to a third person or stranger. Redemption by an agricultural lessee of landholding sold by the landowner. Purpose of the grant of right to co-owners To reduce the number of participants until the community is done away with. The period is 12 months. Redemption by judgment debtor or redemptioner of real property sold on execution. judicially or extra-judicially. Legal redemption 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 to afford him a way out of what might be a disagreeable or inconvenient association into which he has been thrust. Art. The period is 180 days from notice in writing which shall be served by the vendee on all lessees affected and the DAR upon the registration of the sale. they may only do so in proportion to the share they may respectively have in the thing owned in common. 1622. the existence of a coownership. the mortgagor may redeem the property within 1 year from the date of registration of the sale. and property sold after such date is not subject to legal redemption. once the portion corresponding to each heir is fixed.1088). The right of legal redemption among co-owners presupposed of course. 8|P ag e AQ LAW . The right of legal redemption is not granted solely and exclusively to the original co-owners but applies to those who subsequently acquire their respective shares while the community subsists. Should two or more co-owners desire to exercise the right of redemption. Instances of legal redemption Articles 1620. like the right of redemption of a co-owner under Article 1620. In all cases of extra-judicial foreclosure sale. 5. This is to prevent collusion between the buyer and the selling co-owner. The sale must be before partition. The period is 90 days but before confirmation of sale by the court. the following are instances of legal redemption: 1. Redemption by a coowner within the period prescribed by law inures to the benefit of all the other co-owners. 1621. Price of redemption The law requires the redemptioner to pay only a reasonable price if the price of the alienation is grossly excessive.Reviewer in Sales 2011 ADRIENNE O.

the adjacent owners are not given the right of legal redemption because this may lead to the creation of big land estates. and 3. Co-owners exercise their right of redemption pro rata. 2. roads and other apparent servitudes for the benefit of other estates. which are principally for the purpose of residence. 3. roads and other apparent servitudes from the adjoining lands. the one who first requested the redemption. drains. is principally used for the purpose of obtaining products from the soil as opposed to urban lands. is about to be re-sold. Pre-emption It is the act or right of purchasing before others. If the re-sale has been perfected. The right cannot be exercised against a vendee if he is also an adjacent owner. To benefit adjacent owners and public weal as well. 5.Reviewer in Sales 2011 ADRIENNE O. Requisites: 1. Urban land It does not necessarily refer to the nature of the land itself sought to be redeemed nor to the purpose to which it is somehow devoted. The one exercising the right must be an adjacent owner. and 6. 1621. to the one who first requested the redemption. the area of which does not exceed one hectare. ravines. This right is not applicable to adjacent lands which are separated by brooks. also at a reasonable price. There must be an alienation. The recognition of the right of redemption will result in the rescission of the sale. Preference as of rural lands In case two exercise the preference to between two or more adjacent owners or more adjacent owners desire to right of redemption. who acquires from any one of them by purchase or gift. the owner whose intended use of the land in question appears best justified shall be preferred. the owner of the adjoining land shall have a right of redemption. The above requisites must be alleged by the adjoining owner in his complaint and proved by him. It is exercised before the sale or resale against the wouldbe vendor. Both the land of the one exercising the right of redemption and the land sought to be redeemed must be rural. it is still urban in contemplation of Art. The piece of rural land alienated must not exceed 1 hectare. regardless of site. The piece of land sold must be so small and so situated that a major portion thereof cannot be used for any practical purpose within a reasonable time. They can only exercise it against a stranger. 2. 4. unless the grantee does not own any rural land. To protect agriculture. is alienated. The owners of adjoining lands shall also have the right of redemption when a piece of rural land. Art. When the land exceeds 1 hectare. Purpose of the grant of right to owners of adjoining rural lands 1. Even if the land is somehow dedicated to agriculture. Art. but to the character of the community or vicinity in which it is found. or by any other title for value. To avoid difficulties in cultivation. When two or more owners of adjoining lands wish to exercise the right of pre-emption or redemption. 1623. the law gives the owner of the adjoining land of smaller area but if both lands have the same area. If two or more adjoining owners desire to exercise the right of redemption at the same time. drains. It is one which. The rural land sold must not be separated by brooks. if it is located within the center of population or the more or less populated portion of city or town. Such urban land was bought by its owner merely for speculation. Right of legal redemption of adjacent owners of rural lands Requisites for the exercise of the right: 1. a rural estate of the area fixed by law. The lands must be adjacent. the owner of any adjoining land has a right of preemption at a reasonable price. 1622. Art. The right of legal pre-emption or redemption shall not be exercised within 30 days AQ LAW 9|P ag e . 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. ESPARES the development and better administration of the property. and should both lands have the same area. Rural lands ± relating to or constituting tenement in land adopted and used for agricultural or pastoral purposes. ravines. The grantee or vendee must already own any other rural land. Redemption It is exercised after the sale has been perfected against the vendee. The reason behind is to foster the development of agricultural areas by adjacent owners who may desire the increase for the improvement of their own land. 3. the owner of the adjoining land of smaller area shall be preferred. 1622. in payment. 2. having been bought merely for speculation.

and practically make the offer to repurchase through it. no action will be allowed to enforce the right of redemption. an exception to the rule may be adopted . to prevent manifest injustice. as the case may be. the running of the period is not interrupted. On the other hand. it can either be through a formal tender with consignation. 1620.Reviewer in Sales 2011 ADRIENNE O. Even if the person entitled to redeem is a minor. It is preemptory and non-extendible. There is actually no prescribed form for an offer to redeem to be properly effected. as the redemptioner is informed in writing of the sale and the particulars thereof. a situation which obviously is unjust to the purchaser and prejudicial to public interest. or by filing a complaint in court coupled with consignation of the redemption price within the prescribed period. considering that he would thereby save the attorney¶s fees and the expenses of protracted litigation. Form of written notice Article 1623 does not prescribe any particular form of notice so long as the reasons for a written notice are present or otherwise satisfied. The right of a legal redemption is a pure creature of the law. a prior tender by the redemptioner of the price he considers reasonable affords an opportunity to avoid litigation. The 30-day period is not a prescriptive period but is more a requisite or condition precedent to the exercise of the right of legal redemption. as the case may be. and not by the vendee. So long. the 30 days for redemption start running. The right of redemption of co-owners excludes that of adjoining owners. its perfection. and its validity. or by the vendor. 10 | P a g e AQ LAW . The period provided in the above article is absolute. Notice by vendor or prospective vendor The period of 30 days is counted from the notice in writing given by the prospective vendor or by the vendor. This article stresses the need for notice in writing in the 3 specifies of legal redemption in Arts. Similarly. Notice must be in writing Any other kind of notice such as verbal or by registration. and works only one way in favor of the redemptioner. in view of the peculiar circumstances of the case. or the mere knowledge of the sale. The reason for this is that the redemptioner might not know the vendee¶s whereabouts or the latter might even conceal himself to prevent redemption. a case must be filed in court to ascertain the reasonable price. for the landowner may well decide to accept a really reasonable offer. It is a period set by law to restrict the right of the payor exercising the right of legal redemption. the notice being a reaffirmation thereof. How right is exercised The redemptioner my go to the court. beyond the 30-day period. 1621. its terms and its validity and to quiet any doubts that the alienation is not definitive. and 1622. The deed of sale shall not be recorded in the Registry of Property. unless accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners. ESPARES from the notice in writing by the prospective vendor. acquired in some other manner by the legal redemptioner. The reason for the rule is to discourage the keeping for a long time of property in a state of uncertainty. regulated by law. does not satisfy the statute. The reasons for requiring the vendor to give the notice is to remove all doubts as to the fact of the sale. although the above article has provided a particular method of giving notice and that notice must be deemed exclusive. The written notice was obviously exacted by the law to remove all uncertainty as to the sale. It is not one of prescription. therefore. Unless tender or consignation is made requisite to the valid exercise of the right to redeem everytime redemption is attempted. Hence. If no offer is made within the prescribed period.

Master your semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master your semester with Scribd & The New York Times

Cancel anytime.