SUMMARY NOTES ON CHAPTER 7: EXTINGUISHMENT OF SALE

Art. 1600 (1) The contracting parties entered into a

Cause of extinguishment of sale contract deno-minated as contract of sale
(1) Same causes as all other obligations (2) The intention of the contracting parties is
(a) Payment or performance of obligation to secure an existing debt by way of
(b) Loss of the thing due mortgage
(c) Condonation or remission of debt
(d) Confusion or merger of rights Causes where the contract shall be
(e) Compensation presumed to be an equitable mortgage
(f) Novation (1) When the price of a sale with right to
(g) Others repurchase is unusually inadequate
(2) Conventional redemption (2) When the vendor remains in possession
(3) Legal redemption as lessee or otherwise
(3) When upon or after the expiration of the
SECTION 1 - Conventional Redemption right to repurchase, another instrument
Art. 1601 extending the period of redemption or
Conventional Redemption (Right to granting a new period is executed
redeem or Pacto de retro sale) (4) When the purchaser retains for himself a
 takes place when the vendor reserves part of the purchase price
the right to repurchase the thing sold (5) When the vendor binds himself to pay
with the obligation of returning to the the taxes on the thing sold
vendee the: (6) In any other cases, where it may be fairly
(a) Price of the sale, inferred that the real intention of the
(b) Expenses of the contract parties is that the transaction shall secure
(c) Any other legitimate the payment of a debt or the performance
payments made by reason of of any other obligation
sale
(d) Necessary and useful NOTE: The above-cases are presumed
expenses made on the thing equitable mortgage to curtail the
sold circumvention of public policy on pactum
(e) Other stipulations which may commissorium.
have been agreed upon
Art. 1603
NOTE: Conventional redemption is an In case of doubt, courts are generally
accidental element in the contract of sale inclined to construe a transaction purporting
because it must be clearly stipulated upon. to be a sale as an equi-table mortgage,
Thus, the right to redeem must be reserved which involves a lesser transmission of rights
by the seller through a stipulation to that and interest over property in controversy.
effect in the contract of sale. The inadequacy
of the selling price is not a ground for Art. 1604
rescinding the contract. The provisions of article 1602 on
equitable mortgage shall also apply to a
Essence of Conventional Redemption contact purporting to be an absolute sale.
 the essence of a pacto de retro sale
is that the title and ownership of the Art. 1605
property sold is immediately vested in Reformation
the vendee a retro  an equitable remedy by which a court
 subject to the restrictive condition of will modify a written agreement to
repurchase by the vendor a retro reflect the actual intent of the parties
within the redemption period  usually to correct fraud or mutual
mistake in the writing, such as
Art. 1602 incomplete property description in a
Equitable Mortgage deed
 one which although lacking in some
formality, form or words, or other NOTE: The remedy of reformation is to
requisites demanded by a statute correct the instru-ment so as to make it
 reveals the intention of the parties to express the true intent of the parties.
charge a real property as security for a
debt, and contains no-thing impossible Art. 1606
or contrary to law Period of redemption
(1) If there is no period agreed upon
Presumption of equitable mortgage,  shall last four (4) years from the
requisites: date of contract
 SUMMARY NOTES ON CHAPTER 7: EXTINGUISHMENT OF SALE
Art. 1612
(2) If there is an agreement as to period of If multiple people sell an undivided
redemption immovable with a right of repurchase, each
 the period agreed upon cannot person can only exercise that right for their
exceed ten (10) years share. This rule also applies if the seller of an
immovable has multiple heirs, and each heir
Indefinite agreement as to time can only redeem the portion they acquired.

Art. 1607
Rationale: The contract may be in reality an Art. 1613
equity mort-gage and not a pacto de retro
sale. Art. 1614

NOTE: The requirement of the above-article

is merely for purposes of recording or
registration only because the ownership is
consolidated by operation of law.

Art. 1608

Art. 1615
Art. 1616
Art. 1609 Obligation of vendor in case of
Subrogation redemption
 the substitution of one party for (1) Price of the sale
another whose debt the party pays (2) Expenses of the contract
 entitling the paying party to rights, (3) Any other legitimate payments made by
remedies or se-curities that would reason of the sale
otherwise belong to the debtor (4) The necessary and useful expenses made
on the thing sold
Examples of rights to transferred to the
vendee: NOTE: The article uses the term “price,”
(1) Right to mortgage the property hence, this refers to the price paid to the
(2) Right to receive fruits seller by the buyer, not the value of the
thing at the time of repurchase.
NOTE: A sale with right to repurchase However, there can be a contrary to
transfers to the buyer all the elements of stipulation.
ownership subject to a resolutory condition.
Art. 1617
Art. 1610

Art. 1611

Art. 1618
 SUMMARY NOTES ON CHAPTER 7: EXTINGUISHMENT OF SALE
GR: The vendor who recovers the thing sold may desire the increase for the improvement
shall receive it free from all charges or of their own land.
mortgages constituted by the vendee.
XPN: The vendor shall respect the leases Art. 1622
which the buyer may have executed in good NOTE: “Urban” does not refer to the land
faith, and in accordance with the custom of itself nor the purpose to which it is devoted,
the place where the land is situated. but to the character of the community or
region where it is found.
SECTION 2 – Legal Redemption
Art. 1619 Pre-emption
Legal Redemption  the right to buy before others
 the right to be subrogated, upon the
same terms and conditions stipulated Right of pre-emption
in the contract, in the place of one  when the land is about to be resold,
who acquires a thing by: the owner of any adjoining land has a
(a) Purchase right of pre-emption
(b) Dation in payment
(c) By any other transaction Redemption
whereby owner-ship is  the act or an instance of reclaiming or
transmitted by onerous title regaining possession by paying a
specific price
NOTE: While conventional redemption is
created by agreement, legal redemption is Right of redemption
created by law. Legal redemption is in the  if the resale has been perfected, the
nature of a mere privilege created partly for owner of adjoining land has a right of
reason of public policy and partly for the redemption
benefit and convenience of the
redemptioner. Legal redemption may be NOTE: When two or more owners of
effected against movables and immovables. adjoining lands wish to exercise the right, the
owner whose intended use of the land in
Art. 1620 question appears best justified shall be
preferred.

Art. 1623

Art. 1621
Rural
 of relating to or involving the country
or country side, as opposed to a city or
town; characteristics of, suited to, or
living in a rustic setting
 of relating to or involving people,
farmers, etc.
 of relating to or involving tenement in
land adapted and used for agricultural
or pastoral purposes

Rationale: To foster the development of

agricultural areas by adjacent owners who