MODES OF

EXTINGUISHING SALE
Q: What are the causes for extinguishment of sale?
A: A contract of sale is extinguished by:
1. Same causes as all other obligations, namely:
a. Payment or performance
b. Loss of the thing due
c. Condonation or remission of the debt
d. Confusion or merger of the rights
of creditor and debtor
e. Compensation
f. Novation
g. Annulment
h. Rescission
i. Fulfillment of resolutory condition
j. prescription
2. Causes stated in the preceding articles;
3. Conventional Redemption; or
4. Legal redemption
Q: What is redemption?
A: It is a mode of extinguishment wherein the seller
has the right to redeem or repurchase the thing
sold upon return of the price paid.
Q: What are the kinds of redemption?
1. Legal
2. Conventional
Q: Should the right to redeem be incorporated in
every contract of sale?
A: The right of the vendor to redeem/ repurchase
must appear in the same instrument. However,
parties may stipulate on the right of repurchase in a
separate document but in this case, it is valid only
between the parties and not against third persons.
• Q: What is the difference between pre‐emption and redemption?
• PRE‐EMPTION REDEMPTION
• Arises before sale Arises after sale
• Rescission inapplicable There can be rescission of original sale
• Action is directed against Directed against buyer
• prospective seller
• Q: What is the period of redemption?
• A:
• 1. No period agreed upon – 4 years from date of contract
• 2. When there is agreement – should not exceed 10 years; but if it
exceeded, valid only for the first 10 years.
• 3. When period to redeem has expired & there has been a previous
suit on the nature of the contract – seller still has 30 days from final
judgment on the basis that contract was a sale with pacto de retro:
• Rationale: no redemption due to erroneous belief that it is equitable
mortgage which can be extinguished by paying the loan.
• 4. When period has expired & seller allowed the period of
redemption to expire – seller is at fault for not having exercised his
rights so should not be granted a new period
• Q: What is conventional redemption?
• A: Seller reserved the right to repurchase thing sold coupled with
obligation to return price of the sale, expenses of contract & other
legitimate payments and the necessary & useful expenses made on the
thing sold
• Note: Right to repurchase must be reserved at the time of perfection of
sale.
• Q: What is legal redemption?
• A: Also referred to as “retracto legal”, 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.
• instances of legal redemption?
• A:
• 1. Sale of a co‐owner of his share to a stranger (Art. 1620)
• 2. When a credit or other incorporeal right in litigation is sold (Art. 1634)
• 3. Sale of an heir of his hereditary rights to a stranger (Art. 1088)
• 4. Sale of adjacent rural lands not exceeding 1 hectare (Art. 1621)