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EXTINGUISHMENT OF SALE

• CAUSES IN GENERAL

How is a sale extinguished?

This provision of the New Civil Code has laid down three instances on how a sale can be extinguished:
Art. 1600. Sales are extinguished by the same causes as all other obligations, by those stated in the

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preceding articles of this Title, and by conventional or legal redemption.

What is conventional redemption?

The happening of conventional redemption is best defined under this provision:

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. (1507)

*Conventional redemption isthe right which the vendor reserves to himself, to reacquire the property

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sold provided he returns to the vendee the price of the sale, expenses of the contract, any other
legitimate payments made therefore, the necessary and useful expenses made on the thing sold and
fulfills other stipulations which may have been agreed upon.

CASES:
David v. David
FACTS: On July 7, 1995, Respondent Eduardo C. David (Eduardo), and his brother Edwin C. David
(Edwin), acting on their own and in behalf of their co-heirs, sold their inherited properties to Petitioner
Roberto R. David (Roberto), specifically: (a) a 1,231 square meters parcel of land, together with all the
improvements thereon, located in Baguio City (Baguio City lot); and (b) 2 units International CO 967-
Truck Tractor with two Mi-Bed Trailers. A deed of sale with assumption of mortgage (deed of sale)

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embodied the terms of their agreement, stipulating that the consideration for the sale was
P6,000,000.00, of which P2,000,000.00 was to be paid to Eduardo and Edwin, and the remaining
P4,000,000.00 to be paid to Development Bank of the Philippines (DBP) in Baguio City to settle the
outstanding obligation secured by a mortgage on such properties. Eduardo and Edwin was given the
right to repurchase within 3 years from the execution of the deed of sale based on the purchase price
agreed upon, plus 12% interest per annum.

A memorandum of agreement (MOA) was executed by Roberto and Edwin in April 1997, with spouses
Marquez and Soledad Go, by which they agreed to sell the Baguio City lot to the latter for
P10,000,000.00. The Spouses Go then deposited the amount of P10,000,000.00 to Robertos account.
Thereafter, Roberto gave Eduardo P2,800,00.00 and returned to him one of the truck tractors and
trailers subject of the deed of sale.

When Eduardo demanded for the return of the other truck tractor and trailer but Roberto refused, he
initiated a replevin suit again the latter, alleging that he was exercising his right to repurchase under the
deed of sale. Roberto then denied that Eduardo could repurchase the properties in question; and insisted
that the MOA had extinguished their deed of sale by novation.

The RTC rendered a judgment in favor of Eduardo on December 5, 2001. RTC opined that the
stipulation giving Eduardo the right to repurchase had made the deed of sale a conditional sale; that
Eduardo had fulfilled the conditions for the exercise of the right to repurchase; that the ownership of
the properties had reverted to Eduardo; that Robertos defense of novation had no merit; and that due to
Roberto's bad faith in refusing to satisfy Eduardos claim.

Roberto appealed to the CA.

The CA affirmed the decision of RTC. It opined that although there was no express exercise of the right
to repurchase, the sum of all the relevant circumstances indicated that there was an exercise of the right
to repurchase pursuant to the deed of sale, that the findings of the RTC to the effect that the conditions
for the exercise of the right to repurchase had been adequately satisfied by Eduardo, and that no
novation as claimed by Roberto had intervened.

The CA denied Robert's motion for reconsideration. Hence, Roberto filed a petition for review on
certiorari.

ISSUE: Did Respondent Eduardo exercise his right to repurchase?

HELD: A sale with right to repurchase is governed by Article 1601 of the Civil Code, which provides
that: 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. Conformably with Article 1616, the seller given the right to
repurchase may exercise his right of redemption by paying the buyer: (a) the price of the sale, (b) the
expenses of the contract, (c) legitimate payments made by reason of the sale, and (d) the necessary and
useful expenses made on the thing sold.

The CA and the RTC both found and held that Eduardo had complied with the conditions stipulated in
the deed of sale and prescribed by Article 1616 of the Civil Code. From the testimony of the defendant
himself, the preconditions for the exercise of the plaintiffs right to repurchase were adequately satisfied
by the latter. The alleged repurchase was exercised within the stipulated period of 3 years from the time
the Deed of Sale was executed. Moreover, the defendant returned to plaintiff the amount of
P2,800,000.00 from the total purchase price of P10,000,000.00. This only means that this is the excess
amount pertaining to plaintiff and co-heirs after the defendant deducted the repurchase price of
P2,000,000.00 plus interests and his expenses. Add to that is the fact that defendant returned one of the
trucks and trailers subject of the Deed of Sale. In Metropolitan Bank and Trust Company v. Tan, the
court ruled that a redemption within the period allowed by law is not a matter of intent but of payment
or valid tender of the full redemption price within the period. Verily, the tender of payment is the sellers
manifestation of his desire to repurchase the property with the offer of immediate performance. In the
present case, Eduardo paid the repurchase price to Roberto by depositing the proceeds of the sale of the
Baguio City lot in the latter's account. Such payment was an effective exercise of the right to
repurchase. On the other hand, the court dismissed as devoid of merit Roberto's insistence that the
MOA had extinguished the obligations established under the deed of sale by novation. In sales with the
right to repurchase, the title and ownership of the property sold are immediately vested in the vendee,
subject to the resolutory condition of repurchase by the vendor within the stipulated period.
Accordingly, the ownership of the affected properties reverted to Eduardo once he complied with the
condition for the repurchase, thereby entitling him to the possession of the other motor vehicle with
trailer.

DENIED.

EQUITABLE MORTGAGE
What is an equitable mortgage?
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
What are the essential requisites of equitable mortgage?
1. Parties entered into a contract of sale
2. Their intention was to secure an existing debt by way of a mortgage.
What is the rule on the presumption of an equitable mortgage?
A sale with conventional redemption is deemed to be an equitable mortgage in any of the following
cases: (Art. 1602)
1. Price of the sale with right to repurchase is unusually Inadequate
2. Seller Remains in possession as lessee or otherwise
3. 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. Purchaser Retains for himself a part of the purchase price
5. Seller binds himself to pay the Taxes on the thing sold
6. In any other case where the real intention of the parties is that the transaction shall Secure the
payment of a debt or the performance of any other obligation.
7. Art. 1602 shall also apply to a contract purporting to be an Absolute sale. (Art. 1604)
Note: 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.
Remedy is reformation.
An equitable mortgage is one which although lacking in some formality, or form or words, or other
requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real
property as security for a debt, and contains nothing impossible or contrary to law.
CASES:
Aroffo v. Quino
FACTS: Pedro Quiño ("Quiño) was the owner of a parcel of land denominated as Lot 1916-D-3 under
Transfer Certificate of Title ("TCT") No. 28905, containing an area of 166 square meters ("Property"),
situated in Basak, Mandaue City, Cebu. On 11 April 1990, Quiño executed a Deed of Absolute Sale3 of
the Property in favor of Renato Mencias ("Renato"). The Deed of Absolute Sale explicitly excluded
from the sale the house standing on the Property.4 On 11 March 1991, Quiño executed another Deed of
Absolute Sale5 covering the Property in favor of Renato. There is no provision excluding the house
from the sale in the second Deed of Absolute Sale. On 9 May 1991, TCT No. 28905 was cancelled and
TCT No. 30248 was issued in the name of Renato.6
On 30 March 1993, Renato executed a Deed of Absolute Sale7 of the Property in favor of Lourdes S.
Arrofo ("Arrofo"). On 3 August 1993, TCT No. 30248 was cancelled and TCT No. 33304 was issued in
the name of Arrofo.8
On 6 July 1994, Quiño filed before the Regional Trial Court ("trial court") of Mandaue City, Branch 28,
an action for Reconveyance of Property with Annulment of Deeds of Sale and Damages against
Renato, his wife Myrna Mencias ("Myrna") and Arrofo. Quiño claimed that his transaction with Renato
was a mortgage and not an absolute sale. Quiño alleged that he borrowed P15,000 from Renato and the
Property served as security for the loan. He further alleged that the agreement was that the Deed of
Absolute Sale he signed would only be registered with the Register of Deeds should he fail to pay
his P15,000 loan, plus interest at 7% per month, within five years from 11 April 1990.
The trial court declared Renato and Myrna in default for failure to attend the pre-trial conference
despite notice.9 Still, Myrna was able to testify because Arrofo presented her as a witness. On 29
January 1996, the trial court rendered its Decision,10 the dispositive portion of which reads:
WHEREFORE, foregoing premises considered, Decision is hereby rendered:
1) declaring the Deed of Absolute Sale dated April 11, 1990 executed and signed by plaintiff
Pedro Quiño in favor of the defendants spouses Mencias as valid;
2) declaring the Deed of Absolute Sale dated March 30, 1993 executed by defendants spouses
Renato and Myrna Mencias in favor of their co-defendant Lourdes Arrofo as valid;
3) dismissing the claim for damages, attorney’s fees and litigation expenses by the parties for
lack of basis; and
4) ordering the plaintiff to pay the cost.
SO ORDERED.11
Quiño appealed to the Court of Appeals seeking reversal of the trial court’s Decision.
The Ruling of the Court of Appeals
In a Decision promulgated on 16 October 2000, the Court of Appeals reversed the trial court’s
Decision, as follows:
WHEREFORE, premises considered, the present appeal is hereby GRANTED. The Decision dated
January 29, 1996 of the Regional Trial Court of Mandaue City, Cebu, Branch 28 is hereby REVERSED
and SET ASIDE and a new one entered:
(1) Annulling the Deed of Absolute Sale dated April 11, 1990 and Deed of Absolute Sale dated
March 11, 1991;
(2) Reinstating TCT No. 28905 covering Lot 1916-D-3 registered in the name of plaintiff-
appellant, and cancelling the two (2) TCTs (30248 and 33304) issued in derivation thereof; and
(3) Ordering plaintiff-appellant, to pay defendant-appellee Myrna Mencias the amount
of P15,000.00 within thirty (30) days from the date of finality of this decision, with 7% interest
per month computed from April 11, 1990 until full payment thereof.
Costs against the defendants-appellees.
SO ORDERED.12
The appellate court ruled that the trial court erred in finding that the transaction between Quiño and
Renato is one of sale. The appellate court also found that Arrofo is not a buyer in good faith.
Hence, this petition by Arrofo.
ISSUE: 1. Whether the Court of Appeals correctly ruled that the Deed of Sale dated April 11, 1990
executed by Quiño in favor of Renato is void as the true agreement of the parties is one of equitable
mortgage.
2. Whether the Court of Appeals correctly ruled that Arrofo is not a buyer in good faith, and thus the
Deed of Sale executed by Renato in her favor is void
HELD: The petition must fail. The contract between Quiño and Renato is an equitable mortgage.
Presumptions of an Equitable Mortgage
This Court has ruled that there is no conclusive test to determine whether a deed purporting to be an
absolute sale on its face is in reality a loan secured by a mortgage.14 Thus:
The decisive factor in evaluating such agreement is the intention of the parties, as shown not
necessarily by the terminology used in the contract but by all the surrounding circumstances, such as
the relative situation of the parties at that time, the attitude, acts, conduct, declarations of the parties,
the negotiations between them leading to the deed, and generally, all pertinent facts having a tendency
to fix and determine the real nature of their design and understanding. xxx15
Under Article 1602, in relation to Article 160416 of the Civil Code, a contract purporting to be an
absolute sale is deemed 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.17
The presence of any of these circumstances is sufficient for a contract to be deemed an equitable
mortgage.18
The following circumstances lead us to conclude that the real intention of the parties is to treat the
transaction as an equitable mortgage rather than an absolute sale.
First, Renato and Myrna did not take possession of the Property after the execution of the first Deed of
Absolute Sale. Flaviano Moralde, Jr. ("Moralde"), a lessee of Quiño since 1989, confirmed this.
Moralde testified that he has been paying the rentals to Quiño. He learned about the sale of the Property
to Renato only on 19 April 1993 when he received a letter dated 12 April 1993 from Myrna’s lawyer
instructing him to pay his rentals to Myrna. The letter at the same time demanded that he vacate the
Property. Moralde testified that Myrna subsequently filed an ejectment case against him but the case
was dismissed.19 Moralde presented receipts,20 dated 30 January 1995, 28 February 1995, 30 March
1995 and 30 April 1995, evidencing his payments to Quiño.
Myrna’s lawyer sent the demand letter dated 12 April 1993 after the Property was sold to Arrofo.
Renato sold the Property to Arrofo on 30 March 1993. Hence, when Myrna demanded payment of
rentals from Moralde, Renato was no longer the owner of the Property.
There is no evidence that Renato and Myrna attempted to take possession of the property from the time
of the execution of the first Deed of Absolute sale in 1990 or even after the execution of the second
Deed of Absolute Sale in 1991. Moralde was never informed that there was already a new owner. He
was never asked to remit his payments to the new owner. Since Moralde continued making his
payments to Quiño, Quiño must have retained his possession of the Property.
Second, neither the first nor the second Deed of Absolute Sale reflects the real intention of the parties.
Fiscal Bienvenido Mabanto, Jr. ("Mabanto") is a signatory to the first Deed of Absolute Sale as one of
the witnesses to the transaction. He prepared the original draft of the document but being a government
employee, he did not make the final draft.
Thus, Arrofo should have inquired who occupied the house, and if a lessee, who received the rentals
from such lessee. Such inquiry would have led Arrofo to discover that the lessee was paying rentals to
Quiño, not to Renato and Myrna, who claimed to own the Property.
One final point. The Court of Appeals ordered Quiño to pay 7% interest per month on the P15,000 loan
from Renato, computed from 11 April 1990. This amounts to 84% interest per annum, which is
unconscionable. This Court deems it equitable to reduce this interest rate to 18% per annum.36
WHEREFORE, we DENY the petition. We AFFIRM with modification the Decision of the Court of
Appeals promulgated on 16 October 2000 in CA-G.R. CV No. 53733. Respondent Pedro Quiño shall
pay 18% interest per annum on his P15,000 loan from Renato Mencias. The assailed Decision is
affirmed in all other aspects.

LUMAYAG v. HEIRS OF JACINTO NEMENO

FACTS: On 1985, JACINTO NEMENO, conveyed to LUMAYAG the two parcels of coconut land. The
instrument of conveyance is denominated as Deed of Sale with Pacto De Retro. It was stipulated that
the consideration for the alleged sale was P20,000.00 and that the vendors a retro have the right to
repurchase the same lots within five years from the date of the execution of the instrument. It was
likewise agreed thereunder that in the event no purchase is effected within the said stipulated period of
five years "conveyance shall become absolute and irrevocable without the necessity of drawing up a
new absolute deed of sale, subject to the requirements of law regarding consolidation of ownership of
real property."

The NEMENOs filed against the LUMAYAGs on December 1996 a complaint for Declaration of
Contract as Equitable Mortgage, Accounting and Redemption with Damages. LUMAYAG denied that
the contract in question was an equitable mortgage and claimed that the amount of P20,000.00 received
by the plaintiff heirs was the consideration for the sale of the two lots and not a loan and asserted that
the action was already barred by laches and prescription and the complaint itself states no cause of
action.

ISSUE: Whether or not the deed of sale executed by the parties with pacto de retro is actually an
equitable mortgage.

Were the titles to the subject parcels of land had already been consolidated to petitioners by operation
of law because the five (5)-year prescriptive period for the respondents to repurchase expired in 1990?

Was the action to redeem the property already time-barred?

HELD: 1) The transaction was one of an equitable mortgage. First, the supposed price for the sale with
pacto de retro in the amount of P20,000.00 is unusually inadequate for the two (2) parcels of land, the
total area of which is almost 5.5 hectares. Seocnd, REPONDENTs remained in possession of the
subject properties even after the execution of the subject instrument. Third, they also paid for the realty
taxes of the same. Fourth, the attendance of a pactum commissorium renders the stipulation contrary to
the nature of a true pacto de retro sale.
An equitable mortgage has been defined "as one which although lacking in some formality, or form or
words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to
charge real property as security for a debt, and contains nothing impossible or contrary to law."

Article 1602 of the Civil Code enumerates the instances when a contract, regardless of its
nomenclature, may be presumed to be an equitable mortgage, to wit:
(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.

The presence of even one of the circumstances in Article 1602 is sufficient basis to declare a contract as
one of equitable mortgage.

2) Evidently, the failure of the respondent heirs to redeem the properties within the stipulated period
indubitably vested the absolute title to and ownership thereof to the petitioners. But such consequence
would only be true if the contract that was executed between the parties was indeed a pacto de retro
sale and not an equitable mortgage. Having ruled that the instrument executed by the parties is one of
an equitable mortgage, RESPONDENTS can now redeem the mortgaged properties from
PETITIONER within thirty (30) days from finality of this decision. Otherwise, the latter would be
given the option to foreclose the mortgaged properties, for as a rule, in a real estate mortgage, when the
principal obligation is not paid when due, the mortgagee has the right to foreclose the mortgage and to
have the property seized and sold with the view of applying the proceeds to the payment of the
obligation.

ROCKVILLE EXCEL INTERNATIONAL EXIM CORP. v. CULLA

FACTS:
Subject of the issue is a portion of a lot located in Poblacion, San Pedro, Laguna. The Republic of the
Philippines acquired through purchase the San Pedro Tunasan Homesite. Apolinario Hermosilla, who
was occupying a lot in the said homesite until his death in 1964, caused the subdivision of this lot into
two, Lot 12 and Lot 19. He transferred Lot 19 to his grandson Jaime Remoquillo and Lot 12 to his son
Salvador Hermosilla. In 1972, Jaime and Salvador made a Kasunduan whereby Jaime transferred
ownership of the 65sq.m. in Lot 19 in favor of Salvador. In 1986, the National Housing Authority
awarded Lot 19 to Jaime, for which he and his wife were issued a title.The petitioners, heirs of
Salvador, filed an action for annulment of the title on the ground of fraud with damages against Jaime
and his spouse, alleging that by the virtue of the Kasunduan, the lot in controversy was already
conveyed to Salvador. The trial court found the Kasunduan a perfected contract of sale, declared
the petitioners as co-owners of the subject property. The CA, however, reversed the trial court’s
decision, rendering the Kasunduan void because at the time of its execution , the lot was still owned
by the Republic of the Philippines. No right was transferred to both Jaime and Salvador. The CA held
that the action had prescribed.

ISSUE: Can the petitioners seek the reconveyance of the property based on fraud?
HELD: No. It is true that petitioners’ houses occupy property. Since there was no actual need to
reconvey the property as petitioners remained in possession of the property, the action took the nature
of a suit for quieting of title, it having been filed to enforce an alleged implied trust after Jaime
refused to segregate title over Lot 19. One who is in actual possession of a piece of land claiming to be
the owner thereof may wait until his possession is disturbed or his title is attacked before taking steps
to vindicate his right. From the body of the complaint, this type of action denotes imprescriptibility.
The lots can not be transferred to both Jaime and Salvador since the Lots is owned by The Republic of
The Philippines. Nemo dat quod non habet. Nobody can give what he does not possess. Jaime could
not thus have transferred anything to Salvador. Moreover, since the property was previously a public
land, petitioners have no personality to impute fraud or misrepresentation against the State or
violation of the law. Also, for an action for reconveyance based on fraud to prosper, the petitioners
must prove by clear and convincing evidence not only his title to the property but also the fact of
fraud. Fraud is never presumed. Intentional acts to deceive and deprive another of his right, or in some
manner injure him must be specifically alleged and proved by the petitioners by clear and
convincing evidence. Petitioners failed to discharge this burden.

HEIRS OR REYNALDO DELA ROSA v. MARIO A. BATONGBACAL

Facts:
The subject prope1iy consists of a 3,750 square meter-portion of the 15,001 square meters parcel of
land situated in Barrio Saog, Marilao, Bulacan denominated as Lot No. 1, and registered under Transfer
Certificate of Title (TCT) No. T-1 07449[4] under the names of Reynaldo Del a Rosa (Reynaldo),
Eduardo Dela Rosa (Eduardo), Araceli Del a Rosa (Araceli) and Zenaida Dela Rosa (Zenaida).
Sometime in 1984, Reynaldo offered to sell the subject property to Guillermo Batongbacal (Guillermo)
and Mario Batongbacal (Mario) for F50.00 per square meter or for a total of Fl87,500.00. Pursuant to
the agreement, Reynaldo received an advance payment of F31 ,500.00 leaving a... balance of
F156,000.00
Mario and Guillermo, on their own instance, initiated a survey to segregate the area of 3,750 square
meters from the whole area covered by TCT No. T-107449, delineating the boundaries of the
subdivided parts. As a result, they... came up with a subdivision plan specifically designating the
subject property signed by a Geodetic Engineer. Mario and Guillermo thereafter made several demands
from Reynaldo to deliver the SPA as agreed upon, but such demands all went unheeded.
In their Complaint docketed as Civil Case No.
215-M-90, Mario and Guillermo asserted that they have a better right over the subject property and
alleged that the subsequent sale thereof effected by Reynaldo to third persons is void as it was done in
bad faith.
Reynaldo in his Answer countered that the purported Contract to Sell is void, because he never gave his
consent thereto. Reynaldo insisted that he was made to understand that the... contract between him and
the Batongbacals was merely an equitable mortgage whereby it was agreed that the latter will loan to
him the amount of P31,500.00 payable once he receives his share in the proceeds of the sale of the land
RTC, in a Decision dated 24 March 1999, dismissed Civil Case No. 215-M-90 and ordered Reynaldo to
return to the former the sum of P28,000.00 with 12% annual interest
On appeal, the Court of Appeals, in its Decision[12] dated 7 December 2006, brushed aside the claim
of equitable mortgage and held that the sale effected by Reynaldo of his undivided share in the property
is valid and enforceable.
According to the appellate court, no SPA is necessary for Reynaldo's disposition of his undivided share
as it is limited to the portion that may be allotted to him upon the termination of the co-ownership.
On 9 September 2007, the appellate court was notified of the death of Reynaldo, and his heirs sought to
be substituted as party in this case.[
Petitioners Heirs of Reynaldo are now before this Court via this instant Petition for Review on
Certiorari praying that the Court of Appeals Decision and Resolution be reversed on the ground that it
was rendered not in accordance with the applicable law and... jurisprudence.
Issues: W/N There is a contract of sale.
W/N Respondents are Guilty of Laches
W/N Respondents are Entitled to an award of damages
Ruling:
In assailing the Court of Appeals' Decision and Resolution, petitioners are unflinching in their stand
that the disputed contract purporting to be an absolute deed of sale was an equitable mortgage with the
subject property as security for a loan obligation. To prove their point, petitioners asserted that the
consideration in the amount of P187,500.00 for a property consisting of 15,001 square meters is grossly
inadequate because the land valuation in Barrio Saog, Marilao, Bulacan, at the time the transaction was
entered into by the parties in 1984, was already P80.00 to P110.00 per square meter.
For the presumption of an equitable mortgage to arise, two requisites must concur: (1) that the parties
entered into a contract denominated as a sale; and (2) the intention was to secure an existing debt by
way of mortgage.
As a co-owner of the subject property, Reynaldo's right to sell, assign or mortgage his ideal share in the
property held in common is sanctioned by law.
Court of Appeals correctly ruled that the terms in the Contract to Sell, which limited the subject to
Reynaldo's ideal share in the property held in common is perfectly valid and binding. In fact, no
authority from the other co-owners is necessary for such disposition to be... valid as he is afforded by
the law fullownership of his part and of the fruits and benefits pertaining thereto.
Basic is the rule that if the terms of the contract are clear and leave no doubt upon the intention of the
parties, the literal meaning of its stipulations shall control, we find that the Court of Appeals cannot be
faulted for ruling, in modification of its original judgment, that the sale effected by Reynaldo of his
undivided share in the property is valid and enforceable.

What is legal redemption?

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 transferred by onerous title. It must be exercised within thirty (30)
days from the notice in writing by the vendor. This does not apply to barter, donation, transmission of
things by hereditary title, mortgage, lease.

CASES:
ARMANDO BARCELLANO v. DOLORES BAÑAS

Facts:
Respondent Bañas is an heir of Bartolome Bañas who owns in fee simple Lot 4485, PLS-722-D
situated in Hindi, Bacacay, Albay. Adjoining the said lot is the property of Vicente Medina (Medina)
with an area of 1,877 square meters. On 17 March 1997, Medina offered his lot for sale to the adjoining
owners of the property, the heirs of Bartolome Bañas, including herein respondent Dolores Bañas,
Crispino Bermillo (Bermillo) and Isabela Bermillo-Beruela (Beruela)
On 3 April 1997, Medina sold the property to herein petitioner Armando Barcellano for P60,000.00.
the heirs of Bañas learned about the sale and went to the house of Medina to inquire about it.
he heirs conveyed their intention to redeem the property but Medina replied that there was already a
deed of sale executed between the parties. Also, the Bañas heirs failed to tender the P60,000.00
redemption amount to Medina.
Aggrieved, the heirs went to the Office of the Barangay Council on 5 April 1997.
According to one of the Bañas heirs, Barcellano told them that he would be willing to sell the property
but for a higher price of P90,000.00.
On 24 October 1997, Dolores Bañas filed an action for Legal Redemption before the Regional Trial
Court. However, on 5 February 1998, the petition was withdrawn
On 11 March 1998, Dolores Bañas, as represented by Bermillo, filed another action for Legal
Redemption. It was opposed by Barcellano insisting that he complied with the provisions of Art. 1623
of the New Civil Code but Bañas failed to exercise her right within the period provided by law.
On 15 March 2000, the trial court dismissed the complaint of the Bañas heirs for their failure to comply
with the condition precedent of making a formal offer to redeem and for failure to file an action in
court together with the consignation of the redemption price within the reglementary period of 30 days.
On appeal, the Court of Appeals reversed and set aside the ruling of the lower court and granted the
heirs the right to redeem the subject property.
Barcellano maintains that the written notice required under Art. 1623 to be given to adjoining owner
was no longer necessary because there was already actual notice.
Nothing in the records and pleadings submitted by the parties shows that there was a written notice sent
to the respondents. Without a written notice, the period of thirty days within which the right of legal
pre-emption may be exercised, does not start
Issues:
the person having the right to redeem is STILL entitled to the written notice
Ruling:
The law is clear in this case, there must first be a written notice to the family of Bañas.
The respondent Bañas has a perfect right of redemption and was never in danger of losing such right
even if there was no redemption complaint filed with the barangay, no tender of payment or no
consignation

Redemption under Different Special Laws

 1. ACT 3135 - The right of redemption being statutory,61 the mortgagor may compel the
purchaser to sell back the property within the one (1 )-year period under Act No. 3135. If the
purchaser refuses to sell back the property, the mortgagor may tender payment to the Sheriff
who conducted the foreclosure sale.
2. ACT 1508 - When the condition of a chattel mortgage is broken, a mortgagor or person holding
a subsequent mortgage, or a subsequent attaching creditor may redeem the same by paying or
delivering to the mortgagee the amount due on such mortgage and the reasonable costs and
expenses incurred by such breach of condition before the sale thereof. An attaching creditor
who so redeems shall be subrogated to the rights of the mortgagee and entitled to foreclose the
mortgage in the same manner that the mortgagee could foreclose it by the terms of this Act.
3. PUBLIC LAND ACT – Sec. 5. of this Act Provides, That when a land not covered by a
Torrens Title, a homestead or free patent land is foreclosed, the homesteader or free patent
holder, as well as their heirs shall have the right to redeem the same within two years from the
date of foreclosure.
4. CONDOMINIUM ACT - An assessment upon any condominium made in accordance with a
duly registered declaration of restrictions shall be an obligation of the owner thereof at the time
the assessment is made. The amount of any such assessment plus any other charges thereon,
such as interest, costs (including attorney's fees) and penalties, as such may be provided for in
the declaration of restrictions, shall be and become a lien upon the condominium assessed when
the management body causes a notice of assessment to be registered with the Register of Deeds
of the city or province where such condominium project is located. The notice shall state the
amount of such assessment and such other charges thereon a may be authorized by the
declaration of restrictions, a description of the condominium, unit against which same has been
assessed, and the name of the registered owner thereof. Such notice shall be signed by an
authorized representative of the management body or as otherwise provided in the declaration
of restrictions. Upon payment of said assessment and charges or other satisfaction thereof, the
management body shall cause to be registered a release of the lien.
Such lien shall be superior to all other liens registered subsequent to the registration of said notice of
assessment except real property tax liens and except that the declaration of restrictions may provide for
the subordination thereof to any other liens and encumbrances.
Such liens may be enforced in the same manner provided for by law for the judicial or extra-judicial
foreclosure of mortgages of real property. Unless otherwise provided for in the declaration of
restrictions, the management body shall have power to bid at foreclosure sale. The condominium owner
shall have the same right of redemption as in cases of judicial or extra-judicial foreclosure of
mortgages.

5. NIRC – Redemption of Property Sold. – Within one (1) year from the date of sale, the
delinquent taxpayer, or any one for him, shall have the right of paying to the Revenue District
Officer the amount of the public taxes, penalties, and interest thereon from the date of
delinquency to the date of sale, together with interest on said purchase price at the rate of fifteen
percent (15%) per annum from the date of purchase to the date of redemption, and such
payment shall entitle the person paying to the delivery of the certificate issued to the purchaser
and a certificate from the said Revenue District Officer that he has thus redeemed the property,
and the Revenue District Officer shall forthwith pay over to the purchaser the amount by which
such property has thus been redeemed, and said property thereafter shall be free from the lien of
such taxes and penalties. National Tax Research Center 263 The owner shall not, however, be
 deprived of the possession of the said property and shall be entitled to the rents and other
income thereof until the expiration of the time allowed for its redemption.
6. GENERAL BANKING LAW – The general rule in redemption is that it is not sufficient that a
person offering to redeem manifests his desire to do so. The statement of intention must be
accompanied by an actual and simultaneous tender of payment. This constitutes the exercise of
the right to repurchase