Section 2-Legal Redemption

Sarah Mae Ceballos

Mariah Therese Quiepo
 Definition of Legal Redemption
- As the word “thing” is employed without
qualification, the right applies to both
movable and immovable property.
- It is the right to be subrogated upon the same
terms and conditions stipulated in the
contract, in the place of one who acquires the
thing by purchase or by dation in payment or
by other transaction whereby ownership is
transmitted by onerous title.
 Legal Redemption: Nature and basis
of right
• Conventional redemption arises from the
voluntary agreement of the parties, legal
redemption proceeds from law.
• 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
redemption to afford him a way out of what
might be a disagreeable or inconvenience
association into which he has been thrust.
 Article 1620
Co-owner’s right of legal redemption; how exercised

• 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.
• 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.
 Reason for co-owner’s right to
redeem
The purpose of the law in establishing the right
of legal redemption between co-owners is to
reduce the numbers of participants until the
community is done away with, as being a
hindrance to the development and better
administration of the property.
 Article 1621
Legal redemption by adjacent owners of
rural lands
• Both the land of the one exercising the right of
redemption and the land sought to be redeemed
must be rural.
• The lands must be adjacent.
• There must be an alienation
• The piece of rural land alienated must not exceed
one (1) hectare
• The vendee must already own some rural land; and
• The rural land sold must not be separated by brooks,
drains, ravines, roads and other apparent servitudes
from the adjoining lands.
 Reason for adjacent owners to
redeem
• Is to prevent an adjoining real estate
belonging to another owner or owners the
area of which does not exceed one hectare,
from passing into the hands of a person other
than some one of the adjacent owners who
are interested in making use of the alienated
property for the improvement and
development of their own land.
 Article 1622
Rights of pre-emption and redemption;
when exercised
• Pre-emption which has been defined as the
act or right of purchasing, before others. It is
exercised before the sale or resale against the
would-be-vendor.
• Redemption which is exercised after the sale
against the vendee.
Assignment of credits
 Article 1624
Definition and nature: Assignment of
credit
Assignment of credit is a contract by which on
person (assignor/creditor) transfers to another
his rights and actions against a third person
(debtor) in consideration of a price certain in
money or its equivalent.
 Nature of Assignment of credit

• Assignment of credits and other incorporated

rights is a consensual, bilateral, onerous, and
commutative or aleatory contract.
• It is really a sale. Thus, the subject matter is
the credit or right assigned; the consideration
is the price paid for the credit or right; and the
consent is the agreement of the parties to the
assignment of the credit or right at the agreed
price.
 Article 1625
When contract is perfected; binding effect
• As between the parties, the assignment is valid although it
appears only in a private document so long as the law does
not require a specific form for its validity.
• To affect third persons, it must appear in a public instrument
and in case it involves real property, it is indispensable that it
be recorded in the Registry of Property.
• The assignee merely steps into the shoes of the assignor, the
former acquiring the credit subject to defenses available to
the debtor against the assignor. The assignee is deemed
subrogated to the rights as well as to the obligations of the
seller. He cannot acquire greater rights than those pertaining
to the assignor.
 Article 1626
Debtors consent to assignment

• The debtor who, before having knowledge of

the assignment, pays his creditor shall be
released from the obligation.
 Effect of payment by debtor before
assignment
• In an assignment of credit, the consent of the
debtor is not essential. The law speaks not of
consent but of notice to the debtor.
• The purpose of the notice is to inform the
debtor that from the date of the assignment
he should make payment to the assignee and
not to the original creditor.
 Article 1627
Scope of Assignment
• The assignment of a credit includes not only
the credit itself but also all the rights
accessory thereto. This follows the familiar
rule that the accessory follows the principal.
But the parties may stipulate that the
accessory rights shall not be included in the
assignment.
 Article 1628
Warranties of assignor
• When a creditor assigns his credit, he warrants
only the existence and legality of the credit at the
perfection of the contract. He is not even liable
for the warranty if the credit had been sold as
doubtful.
• There is no warranty as to the solvency of the
debtor unless it is expressly stipulated or unless
the insolvency was already existing and of public
knowledge at the time of the assignment.
 Liabilities of assignor

• For violation of the above warranties, the

liability of the vendor (assignor) in good faith
is limited only to the price received and to the
expenses of the contract, and any other
legitimate payments by reason of the
assignment.
• The assignor in bad faith is liable not only for
the payment of the price and all expenses, but
also for damages.
 Article 1629
Rules for the duration of assignor’s
liability
1. If there is stipulation, then for the term or
period fixed;
2. If there is no stipulation;
• For one (1) year from the assignment of the
credit when the period for payment of the
credit has expired.
• For one (1) year after its maturity, when such
period for payment has not yet expired.
 Article 1630
Sale of successional or hereditary rights

• An inheritance may be sold either with

specification of the properties to be alienated
or without enumerating the things comprising
it, that is to say, the hereditary rights only. The
seller of an inheritance warrants only the facts
of his heir ship but he does not warrant the
objects which make up his inheritance.
 Article 1631
Sale of whole of certain rights, rights or
products for lump sum
• The subject matter is the totality of such
rights, rents or products.
• As a consequence, the vendor warrants only
the legitimacy of the whole and not the
various parts of which it may be composed.
The vendor is not liable for eviction of each of
the various parts unless the eviction involves
the whole or the part of greater value.
 Article 1632
Vendor’s liability in inheritance of fruits
received
• If the vendor merely received the fruits, he
must deliver them to the vendee; if they have
been consumed, he must reimburse the
vendee; if they have been sold, he must
deliver the rice of the sale.
• The liability of the vendor for anything
received from the inheritance sold is subject
to any contrary agreement.
 Article 1633
Vendee’s liability for debts and charges on
estate
• The vendor is obliged to pay the vendee the
fruits or anything received from the
inheritance, it is also just that the vendee be
required to reimburse the vendor for
whatever the latter has paid for the debts of
and charges on the estate.
• The liability of the vendee for the debts and
charges is likewise subject to any agreement
to the contrary.
 Article 1634
Right of legal redemption in sale of credit or
right in litigation
1. There must be a sale or assignment of a credit.
2. There must be a pending litigation at the time of the
assignment. The complaint by the assignor must have been
filed, and answered by the debtor before the sale of the
credit.
3. The debtor must pay the assignee.
a. The price paid by him;
b. The judicial costs incurred by him
c. The interest on the price from the date of payment
4. The right must be exercised by the debtor within thirty
days from the date the assignee demands payment from him.
 Reason for right by debtor

• It gives an advantage to the debtor because

he will pay less than the value of the credit
assigned if he exercises his right to redeem the
same.
• The object of the law in allowing the
redemption by the debtor is to avoid the
purchase by a third person of credits in
litigation merely for speculation.
 Article 1635
Exceptions to debtor’s right of legal redemption

• Sale is to co-heir or co-owner- This exception is

based on the desire to do away with co-ownership or
pro- in division.
• Sale to creditor- There is a lawful basis for the
assignment as the assignee cannot be considered as
a vendee of a right in litigation and as a speculator. It
really refers to a dation in payment.
• Sale to possessor- The reason for this exception is
that the assignee is moved by a desire to preserve
the property and not to speculate at the expense of
the debtor.