!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !

"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
CnA1Lk 13: Lk1INGUISnMLN1 CI
SALL

I. In Genera| (Art|c|es 1231 and 1600)

Art|c|e 1231.
Cb||gat|ons are ext|ngu|shed:

(1) 8y payment or performance,

(2) 8y the |oss of the th|ng due,

(3) 8y the condonat|on or rem|ss|on of the debt,

(4) 8y the confus|on or merger of the r|ghts of cred|tor and debtor,

(S) 8y compensat|on,

(6) 8y novat|on.

Cther causes of ext|ngu|shment of ob||gat|ons, such as annu|ment,
resc|ss|on, fu|f|||ment of a reso|utory cond|t|on, and prescr|pt|on, are
governed e|sewhere |n th|s Code. (11S6a)

Art|c|e 1600.
Sa|es are ext|ngu|shed by the same causes as a|| other ob||gat|ons, by
those stated |n the preced|ng art|c|es of th|s 1|t|e, and by convent|ona|
or |ega| redempt|on. (1S06)

Same grounds by whlch obllgaLlons ln general are exLlngulshed
also apply Lo exLlngulshmenL of obllgaLlons arlslng from sale
o A-LC-8L-CC-CC-nC
! aymenL
Cnly exLlngulshes obllgaLlons Lo whlch
Lhey perLaln ln a conLracL of sale
noL necessarlly Lhe conLracL lLself
! Loss
! 8emlsslon
! CompensaLlon
! Confuslon
! novaLlon
o AnnulmenL
o 8esclsslon
o 8esoluLory CondlLlon
o rescrlpLlon
o ConvenLlonal or Legal 8edempLlon (ArLlcle 1600)

II. Convent|ona| kedempt|on

A. Def|n|t|on (Art|c|e 1601)

Art|c|e 1601.
Convent|ona| redempt|on sha|| take p|ace when the vendor reserves
the r|ght to repurchase the th|ng so|d, w|th the ob||gat|on to comp|y
w|th the prov|s|ons of art|c|e 1616 and other st|pu|at|ons wh|ch may
have been agreed upon. (1S07)
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

1. Convent|ona| kedempt|on 1akes |ace:
When Lhe seller reserved for hlmself Lhe rlghL Lo repurchase Lhe
Lhlng sold, wlLh obllgaLlon Lo:
a. 8eLurn prlce of Lhe sale
b. 8eLurn expenses of Lhe conLracL
c. Any oLher leglLlmaLe paymenLs made by reason of Lhe
sale
d. necessary and useful expenses of Lhe Lhlng sold.
Lven when sale ls one wlLh rlghL Lo repurchase, buyer ls
subrogaLed Lo Lhe seller's rlghLs and acLlons even durlng Lhe
perlod where redempLlon can be made by Lhe seller.
o ln oLher words, rlghL Lo redempLlon does noL prevenL
full consummaLlon.
Who may exerclse?
a. Seller ln whom rlghL ls recognlzed by conLracL
b. Any person Lo whom such rlghL may have been
Lransferred
c. ln Lhe case of legal redempLlon, Lhe person so enLlLled
by law.

8. roper keservat|on Cf k|ght 1o kepurchase
ulsLlngulshlng rlghL Lo redeem from opLlon Lo purchase.
o ArLlcle 1601: 8lghL of repurchase musL be reserved by
Lhe vendor Lhrough sLlpulaLlon Lo LhaL effecL ln Lhe
conLracL of sale
! noL a rlghL granLed Lo Lhe vendor by Lhe vendee
! lL ls one of Lhe sLlpulaLlons ln Lhe conLracL
! Cnce lnsLrumenL execuLed, vendor may no
longer reserve
o Any rlghL LhereafLer granLed Lo Lhe vendor, by Lhe
vendee cannoL be consldered a rlghL Lo repurchase, buL
some oLher rlghL, llke an opLlon Lo buy.
Lssence of pacLo de reLro " LlLle and ownershlp ls lmmedlaLely
vesLed ln Lhe vendee a reLro, sub[ecL Lo a resLrlcLlve condlLlon of
repurchase by Lhe vendor wlLhln Lhe redempLlon perlod.
Sales wlLh rlghLs of repurchase, as deflned by Lhe Clvll Code, are
noL favored. We wlll noL consLrue lnsLrumenLs Lo be sales wlLh a
rlghL Lo repurchase, wlLh Lhe sLrlngenL and onerous effecLs
whlch follow, unless Lhe Lerms of Lhe documenL and Lhe
surroundlng clrcumsLances requlre lL. Whenever, under Lhe
Lerms of Lhe wrlLlng, any oLher consLrucLlon can falrly and
reasonably be made, such consLrucLlon wlll be adopLed and Lhe
conLracL wlll be consLrued as a mere loan unless Lhe courL can
see LhaL, lf enforced accordlng Lo lLs Lerms, lL ls noL an
unconsclonable one. !"#$%&$" () *+"+,&$- ../ 0123 4.5 647789)
:;%$%+, 2"<=& () 1=#>$ =? 3@@A"B& C87 0123 5D. 6CE8E9- FG%;G
%+ $#>+ ;%$A& H"I%BB" () J%+&"+,"+- CE HG%B) 5. 6CECC9 "+I 3K#%+=
() LA"B"- 5D HG%B) .84 6CED59)

1. Va||d Sa|e kequ|red Ior 1here 1o 8e A Va||d k|ght 1o
kepurchase
valld exlsLence of a rlghL Lo repurchase hlnges upon facL LhaL
Lhe underlylng conLracL of sale ls valld, and LhaL Lhere has been
performance.
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
o 8lghL Lo repurchase musL be consLlLuLed as parL of a
vollJ sale aL perfecLlon. MN%BB">%;" () 13- 45 0123 C8E
6CE589)
1

An agreemenL Lo repurchase becomes a promlse Lo sell when
made afLer Lhe sale because when Lhe sale ls made wlLhouL
such agreemenL Lhe purchases acqulres Lhe Lhlngs sold
absoluLely, and, lf he afLerwards granLs Lhe vendor Lhe rlghL Lo
repurchase, lL ls a new conLracL enLered lnLo by Lhe purchases
as absoluLe owner. 2=OA>$& () H"@%=, .C. 0123 DP5 6477/9.
2


2=OA>$& () H"@%=

Iacts: Spouses MarLln and Luclna aplo were owners of a resldenLlal loL
locaLed ln MakaLl. 1hey execuLed a real esLaLe morLgage on sald
properLy Lo obLaln a long from Amparo lnvesLmenLs. upon aplo's
fallure Lo pay Lhe loan, Lhe corporaLlon flled a peLlLlon for exLra[udlclal
foreclosure of morLgage. Slnce Lhe couple needed money Lo prevenL Lhe
foreclosure, Lhey execuLed a ueed of AbsoluLe Sale over Lhe properLy ln
favor of Amella 8oberLs. Cf Lhe 83,000 purchase prlce, 39,000 was
pald Lo Amparo lnvesLmenLs whlle Lhe 26,000 dlfference was reLalned
by Lhe spouses. 1he LlLle Lo Lhe properLy was dellvered Lo Amella
8oberLs.

1hereafLer, Lhe parLles execuLed a 2-year conLracL of lease over Lhe
properLy, wlLh 8oberLs as lessor and aplo as lessee. AL flrsL, aplo pald
hls monLhly renLals, buL sLopped paylng afLer 1983. Powever, he and hls

1
clotovoll v. cA, 190 SC8A 439 (1990), 1ottes v. cA, 216 SC8A 287 (1992),
kobetts v. loplo, 313 SC8A 346 (2007).
2
komos v. lcoslooo, 31 hll (1927).
famlly remalned ln possesslon of Lhe properLy for almosL 13 years.
uesplLe repeaLed demand, aplo refused Lo pay and refused Lo leave
Lhe premlses. Pence, 8oberLs flled a complalnL for unlawful deLalner.

aprlo ralsed Lhe defense LhaL ln Lhe orlglnal conLracL of sale, 8oberLs
gave hlm Lhe rlghL Lo redeem Lhe properLy aL any Llme for a reasonable
amounL. ln facL, on 1983 he remlLLed Lo 8oberLs' auLhorlzed
represenLaLlve, erllLa venLura, Lhe amounL of 230,000 as repurchase
prlce. Allegedly, 8oberLs only refused Lo execuLe a deed of absoluLe sale
because venLura mlsapproprlaLed Lhe amounL of 39,000 from Lhe
supposed repurchase prlce

Issue: WheLher or noL Lhe conLracL of sale enLered lnLo by aplo and
8oberLs ls acLually an equlLable morLgage.

ne|d: nC. lL ls Lhe conLracL of sale. Cne repurchases only whaL one has
prevlously sold. 1he rlghL Lo repurchase presupposes a valld conLracL of
sale beLween same parLles. 8y lnslsLlng LhaL he had repurchased Lhe
properLy, aplo Lhereby admlLLed LhaL Lhe deed of absoluLe sale
execuLed by hlm and 8oberLs was ln facL and ln law a deed of absoluLe
sale and noL an equlLable morLgage, he had acqulred ownershlp over
Lhe properLy based on sald deed. 8espondenL, ls Lhus esLopped from
asserLlng LhaL Lhe conLracL under Lhe deed of absoluLe sale ls an
equlLable morLgage unless Lhere ls an allegaLlon and evldence of
palpable mlsLake on Lhe parL of respondenL, or a fraud on Lhe parL of
8oberLs.

Doctr|ne:

!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
ln sales denomlnaLed as pocto Je tetto, Lhe prlce agreed upon
should noL generally be consldered as Lhe [usL value of Lhe Lhlng
sold, absenL oLher corroboraLlve evldence-Lhere ls no
requlremenL ln sales LhaL Lhe prlce be equal Lo Lhe exacL value
of Lhe Lhlng sub[ecL maLLer of Lhe sale. ML=>"I= NI") LA LAB?%+
() LABB=$"- .P4 0123 DE/ 647789)

C. k|ght Cf kepurchase rovab|e 8y aro| Lv|dence
8lghL Lo repurchase: merely a feaLure ln Lhe conLracL of sale
o 1hus, lL ls governed by Lhe SLaLuLe of lrauds
o Powever, SC has held: when Lhe conLracL of sale ls ln
wrlLlng, parol evldence may be adduced Lo prove Lhe
rlghL Lo repurchase
! 1hls ls because Lhe ueed of Sale and Lhe verbal
agreemenL allowlng Lhe rlghL Lo repurchase are
an lnLegral whole.
! 1he deed of sale lLself ls Lhe noLe or
memorandum" requlred Lo remove Lhe conLracL
from Lhe SLaLuLe of lrauds.
o Also, lf Lhere ls no ob[ecLlon Lo such parol evldence, lL
wlll be admlsslble ln Lrlal.
SC: 8esL Lvldence" 8ule noL an obsLacle Lo Lhe adducemenL of
such parol evldence.
o When parol agreemenL was Lhe movlng cause of Lhe
wrlLLen conLracL.
o When wrlLLen conLracL was execuLed on Lhe
falLh/represenLaLlon of Lhe parol conLracL.
o 8lghL Lo repurchase proved orally ls conslsLenL wlLh
Lerms of wrlLLen conLracL.

D. D|st|ngu|shed Irom Cpt|on 1o urchase

k|ght to kedeem Cpt|on to urchase
noL a separaLe conLracL - merely
parL of a maln conLracL of sale -
cannoL exlsL unless reserved aL
Llme of perfecLlon
Cenerally a prlnclpal conLracL,
creaLed lndependenL of anoLher
conLracL
MusL be lmbedded lnLo Lhe
conLracL of sale upon lLs perfecLlon
May exlsL before or afLer Lhe
perfecLlon of Lhe sale, or be
lmbedded ln anoLher conLracL
upon lLs perfecLlon
uoes noL need a separaLe
conslderaLlon Lo be valld and
effecLlve
MusL have conslderaLlon separaLe
and dlsLlncL from Lhe purchase
prlce
8edempLlon perlod cannoL exceed
10 years
erlod for an opLlon may exceed
10 years
Lxerclse requlres LhaL noLlce be
accompanled by Lender of
paymenL - conslgnmenL when
Lender cannoL be made
8equlres only a noLlce of exerclse
Lo be glven Lo Lhe opLloner
Lxerclse exLlngulshes conLracL of
sale
8esulLs ln perfecLlon of a conLracL
of sale

L. kedempt|on er|od
1he perlod Lo repurchase ls noL suspended merely because
Lhere ls a dlvergence of oplnlon beLween Lhe parLles as Lo Lhe
preclse meanlng of Lhe phrase provldlng for Lhe condlLlon upon
whlch Lhe rlghL Lo repurchase ls Lrlggered. 1he exlsLence of
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
seller o tettos rlghL Lo repurchase Lhe proper ls noL dependenL
upon Lhe prlor flnal lnLerpreLaLlon by Lhe courL of Lhe sald
phrase. Q%&$A>%= () 1AO# 0$"$A 1=BBA,A =? 0;%A+;A "+I
RA;G+=B=,S, P5C 0123 C44 6477.9.

Q%&$A>%= () 1AO# 0$"$A 1=BBA,A =? 0;%A+;A "+I RA;G+=B=,S

Iacts: Asunclon sold Lo Sudlon AgrlculLural Plgh School (SAPS) a parcel
of land, reservlng Lhe rlghL Lo repurchase Lhe same ln case (1) Lhe school
ceases Lo exlsL, or (2) Lhe school Lransfers locaLlon. She had her rlghL
annoLaLed. She dled. 8y vlrLue of 8 412, SAPS was merged wlLh Lhe
Cebu SLaLe College, effecLlve !une 1983. ln 1990, Lhe helrs of Asunclon
soughL Lo exerclse Lhelr rlghL Lo redeem, clalmlng LhaL school has ceased
Lo exlsL.

Issue: WheLher or noL Lhe helrs of Asunclon may sLlll exerclse Lhelr rlghL
Lo redeem Lhe properLy

ne|d: nC. 1helr rlghL has already prescrlbed. Conslderlng LhaL no perlod
for redempLlon was agreed upon, Lhe law lmposes a 4-year llmlLaLlon.
1hls means LhaL from Lhe Llme Lhe school was merged Lo Cebu SLaLe
College, Lhey had 4 years, or unLll !une 1987 Lo redeem Lhe properLy.
Powever, Lhey falled Lo do so wlLhln Lhe perlod. lallure Lo redeem
auLomaLlcally consolldaLes ownershlp ln favor of Lhe vendee. 1he facL
LhaL Lhe rlghL Lo redeem was annoLaLed does noL make lL
lmprescrlpLlble, lL only serves Lo noLlfy Lhlrd persons.

Doctr|ne:

1. When No er|od Agreed Upon
Genera| ku|e: lf lL ls sLlpulaLed LhaL Lhere ls a rlghL Lo redeem,
and ln Lhe absence of agreemenL as Lo perlod of exerclse, lL shall
lasL 4 years from daLe of Lhe conLracL.
Q%&$A>%= () 1AO# 0$"$A 1=BBA,A- P5C 0123 C44 6477.9
o lL was held LhaL Lhe four-year perlod began from
happenlng of condlLlon conLalned ln deed of sale (raLher
Lhan daLe of conLracL).
o CLv: 1hls ls lnexpllcable! (1o be dlscussed laLer)

2. When er|od Agreed Upon
Genera| ku|e: lf Lhere ls an agreemenL as Lo perlod, lL cannoL
exceed 10 years lf lL exceeds 10 years, Lhe agreemenL ls only
valld for Lhe flrsL 10 years.
3+;G#AB () T+$A><AI%"$A 3@@ABB"$A 1=#>$- CP/ 0123 PDP 6CE8/9
o SLlpulaLlon: vendor cannoL redeem wlLhln 19 years from
execuLlon.
o SC: Such ls vold for belng vlolaLlve of Art|c|e 1601, and
flxed Lhe perlod of redempLlon aL Len years.
R"S"= () L#B"S- CD 0123 /.8 6CE5.9
o SLlpulaLlon: rlghL of redempLlon cannoL be exerclsed
wlLhln 10 years
o SC: SLlpulaLlon was vold. Powever, such nulllLy does noL
converL conLracL lnLo a mere lndebLedness nor an
equlLable morLgage.
! ArLlcle 1606 would apply " seller may exerclse
rlghL Lo redempLlon wlLhln a perlod of 10 years
form daLe of conLracL
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
o AlLhough sLlpulaLlon as Lo Lhe perlod may be unclear or
vold, Lhere ls sLlll a sLlpulaLlon.
! 1hus, we follow Lhe 10-year perlod for
redempLlon.
! We do noL conslder Lhe rlghL of redempLlon as
belng one wlLhouL a sLlpulaLed perlod.
!"+I=+, () 3#&$>%"- DC HG%B) P/E 6CEC.9
o SLlpulaLlon: sellers could exerclse ln March of any year.
o Such could be exerclsed for a perlod of 10 years from
daLe LhereafLer, buL noL afLer 10 years
U;G","O%" () 1=#>$ =? 3@@A"B&- D7P 0123 85/ 6CEEE9
o 8lghL Lo redeem had prescrlbes when exerclsed afLer 10
years.

3. endency of Act|on 1o||s kedempt|on er|od
U+, 1G#" () 1">>- .D HG%B) E./ 6CE4E9 " pendency of an acLlon
broughL ln good falLh and relaLlng Lo Lhe valldlLy of a sale a reLro
Lolls Lhe runnlng of Lhe perlod of redempLlon.
o noLe: 1he seller a reLro had glven noLlce of Lhe exerclse
of Lhe redempLlon rlghL wlLhln Lhe redempLlon perlod.
8U1
Q%&$A>%= () 1AO# 0$"$A 1=BBA,A- P5C 0123 C44 6477.9 "
endency of a llLlgaLlon does noL Loll Lhe perlod.
o Such perlod ls noL suspended merely because Lhere ls a
dlvergence of oplnlon beLween Lhe parLles as Lo when
Lhe condlLlon upon whlch Lhe rlghL Lo repurchase ls
Lrlggered.
o LxlsLence of rlghL Lo repurchase ls noL dependenL upon
Lhe lnLerpreLaLlon by Lhe courL of sald condlLlon
o noLe: 1he successors-ln-lnLeresL of Lhe seller a reLro
soughL Lo exerclse Lhe redempLlon rlghL afLer Lhe
explraLlon of Lhe four-year redempLlon perlod.
CLv: no conLradlcLlon beLween Lhese Lwo cases
o lmporLanL conslderaLlon: vesLlng" of Lhe exerclse of
Lhe rlghL by lLs proper exerclse (requlrlng noLlce and
Lender)
o 1hus, ln essence, compleLlon of redempLlon process
(paymenL of amounLs requlred ln ArLlcle 1616) ls Lolled
by Lhe flllng of a clvll acLlon relaLlng Lo Lhe lssue of such
redempLlon
! rovlded LhaL boLh exerclse and flllng would be
done wlLhln redempLlon perlod

4. Non-payment of r|ce Does Not Affect kunn|ng of kedempt|on
er|od
1"$"+,;"$"+, () JA,"S"I"- 84 0123 .C 6CE/89 " nonpaymenL
of purchase prlce does noL serve Lo suspend Lhe perlod of
redempLlon.
o Sale was consummaLed upon execuLlon of documenL,
and dellvery of land Lo Lhe vendee.
o nonpaymenL of Lhe balance of Lhe prlce does noL
suspend Lhe efflcacy of Lhe provlslons of Lhe valld
conLracL.

I. S|tuat|on r|or to kedempt|on
ln a sale o tetto, buyer has a rlghL Lo Lhe lmmedlaLe possesslon
of Lhe properLy sold, unless oLherwlse agreed upon, slnce LlLle
and ownershlp of Lhe properLy sold are lmmedlaLely vesLed ln
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Lhe buyer o tetto, sub[ecL only Lo Lhe resoluLory condlLlon of
repurchase by Lhe seller o tetto wlLhln Lhe sLlpulaLed perlod.
MNI") IA 2%,=+"+ () LA>A;G=- P5D 0123 54/ 6477.9)
C

endlng repurchase, Lhe buyer may allenaLe, morLgage, or
encumber Lhe properLy.
o 8uL such allenaLlon, morLgage or encumbrance ls as
revocable as hls rlghL.
o When rlghL exerclsed, Lhe buyer has Lo reLurn Lhe
properLy free from all encumbrances lmposed by hlm.

G. Who Can kedeem (Art|c|es 1611 to 1614)

Art|c|e 1611.
In a sa|e w|th a r|ght to repurchase, the vendee of a part of an
und|v|ded |mmovab|e who acqu|res the who|e thereof |n the case of
art|c|e 498, may compe| the vendor to redeem the who|e property, |f
the |atter w|shes to make use of the r|ght of redempt|on. (1S13)

Art|c|e 1612.
If severa| persons, [o|nt|y and |n the same contract, shou|d se|| an
und|v|ded |mmovab|e w|th a r|ght of repurchase, none of them may
exerc|se th|s r|ght for more than h|s respect|ve share.

1he same ru|e sha|| app|y |f the person who so|d an |mmovab|e a|one
has |eft severa| he|rs, |n wh|ch case each of the |atter may on|y redeem

1
keyes v. nomoJo, 14 SC8A 213 (1963), 5ollJ nomes, loc. v. cA, 273 SC8A 267
(1997), Mlstetlo v. cebo 5tote colleqe of 5cleoce ooJ 1ecbooloqy, 461 SC8A 122
(2003), coJooqoq v. op, 469 SC8A 361 (2003), komos v. ulzoo, 498 SC8A 17
(2006), lomoyoq v. nelts of Iocloto Nemeo, 326 SC8A 31 (2007).
the part wh|ch he may have acqu|red. (1S14)

Art|c|e 1613.
In the case of the preced|ng art|c|e, the vendee may demand of a|| the
vendors or co-he|rs that they come to an agreement upon the
repurchase of the who|e th|ng so|d, and shou|d they fa|| to do so, the
vendee cannot be compe||ed to consent to a part|a| redempt|on.
(1S1S)

Art|c|e 1614.
Lach one of the co-owners of an und|v|ded |mmovab|e who may have
so|d h|s share separate|y, may |ndependent|y exerc|se the r|ght of
repurchase as regards h|s own share, and the vendee cannot compe|
h|m to redeem the who|e property. (1S16)

ArLlcle 1611 " Seller wanLs Lo repurchase only hls parL: 8uyer
may compel hlm Lo repurchase Lhe whole Lhlng.
ArLlcle 1614 " CredlLors of Lhe seller cannoL make use of Lhe
rlghL of redempLlon agalnsL Lhe buyer, unLll afLer Lhey have
exhausLed Lhe properLy of Lhe seller.
LA V#W<"+ () 1=#>$ =? 3@@A"B&- CP8 0123 /P 6CE8/9
o lf one of Lhe co-owners/co-helrs alone redeem Lhe
whole properLy, he wlll be a mere LrusLee wlLh respecL
Lo Lhe shares of Lhe co-owners/co- helrs.
o 1hus, no prescrlpLlon lles agalnsL Lhe rlghLs of Lhese co-
owners/co-helrs Lo demand from Lhe redempLloner
Lhelr share ln Lhe properLy

n. now kedempt|on Lffected (Art|c|e 1616)
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

Art|c|e 1616.
1he vendor cannot ava|| h|mse|f of the r|ght of repurchase w|thout
return|ng to the vendee the pr|ce of the sa|e, and |n add|t|on:

(1) 1he expenses of the contract, and any other |eg|t|mate payments
made by reason of the sa|e,

(2) 1he necessary and usefu| expenses made on the th|ng so|d. (1S18)

1hree Lhlngs need Lo be reLurned (Art|c|e 1616)
1. rlce of Lhe sale.
2. Lxpenses of conLracL, and any oLher leglLlmaLe
paymenLs made by reason of Lhe sale.
3. necessary and useful expenses made on Lhe Lhlng sold.
Seller may brlng hls acLlon agalnsL every possessor who derlves
rlghL from Lhe buyer.
o Lven lf Lhere ls no menLlon of Lhe rlghL Lo repurchase ln
Lhe conLracL beLween buyer and subsequenL buyer.
o WlLhouL pre[udlce Lo provlslons of roperLy 8eglsLraLlon
uecree and Lhe MorLgage Law, wlLh respecL Lo
morLgagees/purchasers ln good falLh and for value.
lallure Lo pay useful lmprovemenLs enLlLles buyer a reLro Lo
reLaln possesslon of Lhe land unLll acLual relmbursemenL ls
done.
ArLlcle 1616 ls noL excluslve
o lL should be consLrued wlLh ArLlcle 1601 whlch sLaLes
LhaL ln order Lo redeem, ArLlcle 1616 musL be complled
wlLh as well as oLher sLlpulaLlons agreed upon."
Well-seLLled ls Lhe rule LhaL a formal offer Lo redeem musL be
accompanled by a valld Lender of Lhe redempLlon prlce and Lhe
flllng of a [udlclal acLlon, plus Lhe conslgnaLlon of Lhe
redempLlon prlce wlLhln Lhe perlod of redempLlon, ls equlvalenL
Lo a formal offer Lo redeem. MN%BBA,"& () 1=#>$ =? 3@@A"B&- PEE
0123 4/5 647759)
o ln order Lo exerclse Lhe rlghL Lo redeem, only Lender of
paymenL ls sufflclenL MJA,"&@% () 13- CP4 0123 84
6CE859X conslgnaLlon ls noL requlred afLer Lender ls
refused MQ">%"+= () 13- 444 0123 /D5 6CEED9)
o 1he facL LhaL Lhe seller a reLro deposlLed Lhe amounL of
Lhe repurchase money wlLh Lhe Clerk of CourL was
slmply an addlLlonal securlLy.
o Mere sendlng of leLLers expresslng deslre Lo repurchase,
wlLhouL Lender, does noL comply wlLh Lhe requlremenL
of law.
8uL when Lender noL posslble, conslgnaLlon should be made
M1"$"+,;"$"+, () JA,"S"I"- 8P 0123 .C 6CE/89)
A formal offer Lo redeem, accompanled by a booo flJe Lender of
redempLlon prlce, ls noL essenLlal where Lhe rlghL Lo redeem ls
exerclsed Lhrough a [udlclal acLlon wlLhln Lhe redempLlon perlod
and slmulLaneously deposlLlng Lhe redempLlon prlce. MJAA 1G#S
2A"B$S 1=>@) () 13- 4.7 0123 .E5 6CEE.9)
o no prescrlbed form for an offer Lo redeem
o 1hus, we have Lwo ways of redeemlng
! lormal offer Lo pay accompanled by bona flde
Lender of paymenL.
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Cnly necessary Lo preserve rlghL of
redempLlon for furLher enforcemenL.
(as opposed Lo exerclsed).
! Lxerclse Lhrough [udlclal acLlon accompanled
wlLh slmulLaneous deposlL of Lhe redempLlon
prlce.
llllng of acLlon ls equlvalenL Lo formal
offer.
o When ls rlghL of redempLlon deemed vesLed"
! lormal offer Lo redeem, accompanled by bona
flde Lender of paymenL, wlLhln redempLlon
perlod.
! 1hus, Lhe rlghL ls vesLed" - lL may be enforced
even beyond redempLlon perlod

I. kedempt|on r|ce (Art|c|e 1616)
A sLlpulaLlon ln a sale o tetto requlrlng as parL of Lhe
redempLlon prlce lnLeresL for Lhe cosL of money, ls noL ln
conLravenLlon wlLh ArLlcle 1616, slnce Lhe provlslon ls noL
resLrlcLlve nor excluslve, and does noL bar addlLlonal amounLs
LhaL Lhe parLles may agree upon, slnce Lhe arLlcle lLself provldes
and oLher sLlpulaLlons whlch may have been agreed upon."
M0=B%I Y=<A& () 1=#>$ =? 3@@A"B&- 4/. 0123 45/ 6CEE/9)

I. Iru|ts (Art|c|e 1617)

Art|c|e 1617.
If at the t|me of the execut|on of the sa|e there shou|d be on the |and,
v|s|b|e or grow|ng fru|ts, there sha|| be no re|mbursement for or
prorat|ng of those ex|st|ng at the t|me of redempt|on, |f no |ndemn|ty
was pa|d by the purchaser when the sa|e was executed.

Shou|d there have been no fru|ts at the t|me of the sa|e and some ex|st
at the t|me of redempt|on, they sha|| be prorated between the
redempt|oner and the vendee, g|v|ng the |atter the part correspond|ng
to the t|me he possessed the |and |n the |ast year, counted from the
ann|versary of the date of the sa|e. (1S19a)

ArLlcle 1617 on Lhe dlsposlLlon of frulLs of properLy redeemed
applles only when Lhe parLles falled Lo provlde a sharlng
arrangemenL Lhereof, oLherwlse, Lhe parLles conLracLual
sLlpulaLlons prevall) M3B<AI" () L"B#>=- /E 0123 D4/ 6CE//9)
ArLlcle 448 of Lhe Clvll Code on Lhe rlghLs of a bullder ln good
falLh ls lnappllcable ln cases lnvolvlng conLracLs of sale wlLh rlghL
of repurchase-lL ls lnappllcable when Lhe owner of Lhe land ls
Lhe bullder, sower, or planLer. Where Lhe Lrue owner hlmself ls
Lhe bullder of Lhe works on hls own land, Lhe lssue of good falLh
or bad falLh ls enLlrely lrrelevanL. 1he rlghL Lo repurchase may
be exerclsed only by Lhe vendor ln whom Lhe rlghL ls recognlzed
by conLracL or by any person Lo whom Lhe rlghL may have been
Lransferred. ln a sale wlLh rlghL of repurchase, Lhe appllcable
provlslons are ArLlcles 1606 and 1616 of Lhe Clvll Code, and noL
ArLlcle 448. Z">("AW () 3B;%&=- .EP 0123 57 6477E9)

k. Lffect When No kedempt|on Made: Conso||dat|on (Art|c|e 1607)

Art|c|e 1607.
In case of rea| property, the conso||dat|on of ownersh|p |n the vendee
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
by v|rtue of the fa||ure of the vendor to comp|y w|th the prov|s|ons of
art|c|e 1616 sha|| not be recorded |n the keg|stry of roperty w|thout a
[ud|c|a| order, after the vendor has been du|y heard. (n)

8efore Lhe new Clvll Code: when no redempLlon made, buyer
auLomaLlcally acqulred full ownershlp. 1oday, ArLlcle 1607.
o 1hls proceedlng for consolldaLlon ls an ordlnary clvll
acLlon, noL a moLlon lncldenL Lo anoLher acLlon.
o lf such ls denled because conLracL was acLually an
equlLable morLgage, Lhen anoLher acLlon may be flled Lo
collecL/foreclose
ArLlcle 1607 abollshed auLomaLlc consolldaLlon of ownershlp ln
Lhe vendee o tetto upon explraLlon of Lhe redempLlon perlod by
requlrlng Lhe vendee Lo lnsLlLuLe an acLlon for consolldaLlon
where Lhe vendor o tetto may be duly heard. lf Lhe vendee
succeeds ln provlng LhaL Lhe LransacLlon was lndeed a pocto Je
tetto, Lhe vendor ls sLlll glven a perlod of LhlrLy days from Lhe
flnallLy of Lhe [udgmenL wlLhln whlch Lo repurchase Lhe
properLy. M0=B%I Y=<A& () 1=#>$ =? 3@@A"B&- 4/. 0123 45/
6CEE/9)
Cnce Lhe vendor falls Lo redeem Lhe properLy wlLhln Lhe
sLlpulaLed perlod, lrrevocable LlLle shall be vesLed ln Lhe vendee
by operaLlon of law) MNI") IA 2%,=+"+ () LA>A;G=- P5D 0123
54/ 6477.9)
under a sale o tetto, Lhe fallure of Lhe buyer Lo consolldaLe hls
LlLle under ArLlcle 1607 does noL lmpalr such LlLle and
ownershlp because Lhe meLhod prescrlbed Lhereunder ls merely
for Lhe purpose of reglsLerlng and consolldaLlng LlLles Lo Lhe
properLy. ln facL, Lhe fallure on Lhe parL of a seller o tetto Lo
exerclse Lhe redempLlon rlghL wlLhln Lhe perlod agreed upon or
provlded for by law, vesLs upon Lhe buyer o tetto absoluLe LlLle
and ownershlp over Lhe properLy sold by operaLlon of law.
ConsequenLly, afLer Lhe effecL of consolldaLlon, Lhe morLgage or
re-sale by Lhe seller o tetto of Lhe same properLy would noL
Lransfer LlLle and ownershlp Lo Lhe morLgagee or buyer, as Lhe
case may be, under Lhe LaLln maxlm NMO uA1 OuOu NON
nA81. x1"I#+,=, () ["@- P5E 0123 .5C 6477.9)
o noLwlLhsLandlng ArLlcle 1607, recordlng ln Lhe 8eglsLry
of ueeds of Lhe consolldaLlon of ownershlp Lo Lhe buyer
ls noL a condlLlon slne qua non Lo Lransfer of ownershlp
! 8uyer would sLlll be Lhe owner.
! Lssence of pacLo de reLro " LlLle and ownershlp
are lmmedlaLely vesLed ln buyer, sub[ecL Lo
resoluLory condlLlon of repurchase.
! lallure of seller Lo perform Lhe sald condlLlon
vesLs absoluLe LlLle and ownershlp over Lhe
properLy sold.
! lallure Lo consolldaLe LlLle under ArLlcle 1607
does noL lmpalr buyer's ownershlp. 1he meLhod
prescrlbed ls merely for purposes of
reglsLraLlon.

L. Lqu|tab|e Mortgage (Art|c|es 1602-1604)

Art|c|e 1602.
1he contract sha|| be presumed to be an equ|tab|e mortgage, |n any of
the fo||ow|ng cases:

!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
(1) When the pr|ce of a sa|e w|th r|ght to repurchase |s unusua||y
|nadequate,

(2) When the vendor rema|ns |n possess|on as |essee or otherw|se,

(3) When upon or after the exp|rat|on of the r|ght to repurchase
another |nstrument extend|ng the per|od of redempt|on or grant|ng a
new per|od |s executed,

(4) When the purchaser reta|ns for h|mse|f a part of the purchase
pr|ce,

(S) When the vendor b|nds h|mse|f to pay the taxes on the th|ng so|d,

(6) In any other case where |t may be fa|r|y |nferred that the rea|
|ntent|on of the part|es |s that the transact|on sha|| secure the
payment of a debt or the performance of any other ob||gat|on.

In any of the forego|ng cases, any money, fru|ts, or other benef|t to be
rece|ved by the vendee as rent or otherw|se sha|| be cons|dered as
|nterest wh|ch sha|| be sub[ect to the usury |aws. (n)

Art|c|e 1603.
In case of doubt, a contract purport|ng to be a sa|e w|th r|ght to
repurchase sha|| be construed as an equ|tab|e mortgage. (n)

Art|c|e 1604.
1he prov|s|ons of art|c|e 1602 sha|| a|so app|y to a contract purport|ng
to be an abso|ute sa|e. (n)

1. Def|n|t|on
An equlLable morLgage ls one whlch alLhough lacklng ln some
formallLy, or form or words, or oLher requlslLes demanded by a
sLaLuLe, neverLheless reveals Lhe lnLenLlon of Lhe parLles Lo
charge real properLy as securlLy for a debL, and conLalns noLhlng
lmposslble or conLrary Lo law." 2"S<#+I= () !"+I=+,- .45
0123 .CP 6477/9
1

LssenLlal requlslLes of equlLable morLgage: MQ=B%+" () 1=#>$ =?
3@@A"B&- DE8 0123 E/ 6477D9)
4

a. arLles enLered lnLo a conLracL denomlnaLed as a
conLracL of sale, and
b. 1he lnLenLlon was Lo secure an exlsLlng debL by way of a
morLgage.
0"+ HAI>= () JAA- PD7 0123 DD8 6477.9 " when Lhe Lwo above
condlLlons are noL proven, Lhe exlsLence of any clrcumsLance

1
cebollos v. lotestote stote of tbe lote mlqJlo MetcoJo, 430 SC8A 323
(2004), Alvoto v. 1etolJo, 479 SC8A 288 (2006), cltelos v. netoooJez, 490 SC8A
624 (2006), lomoyoq v. nelts of Iocloto Nemeo, 326 SC8A 31 (2007), Ollvotes
v. 5otmleoto, 334 SC8A 384 (2008), 1lo v. Aboyoto, 336 SC8A 173 (2008),
uebezo-loomotqo v. Alooo, 374 SC8A 631 (2008), kockvllle xcel lotetootloool
xlm cotp. v. collo, 602 SC8A 124 (2009), kloqs ltopettles cotp. v. CollJo, 606
SC8A 137 (2009).
2
Motooqolboo v. cA, 273 SC8A 380 (1997), Mottloez v. cA, 338 SC8A 38
(2001), nlloJo v. nelts of kofoel MeJllo, 37 SC8A 237 (2002), cebollos v.
lotestote stote of tbe lote mlqJlo MetcoJo, 430 SC8A 323 (2004), 5oo leJto
v. lee, 430 SC8A 338 (2003), Co v. 8ocotoo, 472 SC8A 229 (2003), cltloq
vlLLAnuLvA, CLSA8 L. PlLllnL LAW Cn SALLS, (1998 ed.), p. 271, komolo v. loyoq,
It., 301 SC8A262 (2006), kobetts v. loplo, 313 SC8A 346 (2007), koymooJo v.
8ooJooq, 326 SC8A 314 (2007), uotoJo vJo. ue uelflo v. uelloto, 342 SC8A 397
(2008), Mooz, It. v. komltez, 629 SC8A 38 (2010).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
enumeraLed ln ArLlcle 1602 cannoL be Lhe basls Lo LreaL Lhe
LransacLlon as an equlLable morLgage.
Genera| ku|e: ln oLher words, we look aL Lhe Lwo requlslLes flrsL
before golng Lo ArLlcle 1602.
1he declslve facLor ln evaluaLlng wheLher an agreemenL ls an
equlLable morLgage ls Lhe lnLenLlon of Lhe parLles, as shown noL
necessarlly by Lhe Lermlnology used ln Lhe conLracL buL by all
Lhe surroundlng clrcumsLances, such as Lhe relaLlve slLuaLlon of
Lhe parLles aL LhaL Llme, Lhe aLLlLude, acLs, conducL, declaraLlons
of Lhe parLles, Lhe negoLlaLlons beLween Lhem leadlng Lo Lhe
deed, and generally, all perLlnenL facLs havlng a Lendency Lo flx
and deLermlne Lhe real naLure of Lhelr deslgn and
undersLandlng. necesslLous men are noL always free, ln LhaL Lo
answer a presslng emergency, Lhey wlll submlL Lo any Lerm LhaL
Lhe crafLy may lmpose on Lhem. !"+," () !ABB=- P/C 0123 5.D
6477.9
1

1hls klnd of arrangemenL, where Lhe ownershlp of Lhe land ls
supposedly Lransferred Lo Lhe buyer who provldes for Lhe funds
Lo redeem Lhe properLy from Lhe bank buL noneLheless allows
Lhe seller Lo laLer on buy back Lhe properLles, ls ln Lhe naLure of
an equlLable morLgage governed by ArLlcles 1602 and 1604 of
Lhe Clvll Code. !";#+,"+ () 1=#>$ =? 3@@A"B&- ./P 0123 5P4
647789)
lf Lhe Lerms of Lhe pocto Je tetto sale were unfavorable Lo Lhe
vendor, courLs have no buslness exLrlcaLlng her from LhaL bad
bargaln-courLs are noL guardlans of persons who are legally

1
Aosttlo v. Coozoles, It., 420 SC8A 414 (2004), koymooJo v. 8ooJooq, 326
SC8A 314 (2007).
compeLenL. L=>"I= NI") LA LAB?%+ () LABB=$"- .P4 0123 DE/
647789)

2. kat|ona|e 8eh|nd rov|s|ons Cn Lqu|tab|e Mortgage
1he provlslons of Lhe Clvll Code governlng equlLable morLgage
dlsgulsed as sale conLracLs are prlmarlly deslgned Lo curLall Lhe
evlls broughL abouL by conLracLs of sale wlLh rlghL Lo
repurchase, parLlcularly Lhe clrcumvenLlon of Lhe usury law and
poctom commlssotlom. YA%>& =? \=&A 2ASA&- \>) () 2ASA&- 545
0123 /.8 647C79)
o 1hey envlslon conLracLs of sale w/ rlghL Lo repurchase
where Lhe real lnLenLlon of Lhe parLles ls LhaL Lhe
repurchase prlce ls money loaned, and Lhe pacLo de
reLro sale" ls a means of securlng Lhe loan.
o Slnce ArLlcle 1602 ls remedlal ln naLure, lL was applled
reLroacLlvely ln cases prlor Lo Lhe effecLlvlLy of Lhe new
Clvll Code.

3. When In Doubt, Construe As Lqu|tab|e Mortgage And Not
k|ght 1o kepurchase
When ln doubL, courLs consLrue LransacLlons as equlLable
morLgages slnce lL provldes for lesser Lransmlsslon of rlghLs.
o 1he law on equlLable morLgage favors Lhe leasL
Lransmlsslon of rlghLs and lnLeresL over a properLy ln
conLroversy, slnce Lhe law seeks Lo prevenL
clrcumvenLlon of Lhe law on usury and Lhe prohlblLlon
agalnsL poctom commlssotlom provlslons. AddlLlonally,
lL ls almed Lo end un[usL or oppresslve LransacLlons or
vlolaLlons ln connecLlon wlLh a sale or properLy. 1he
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
wlsdom of Lhese provlslons cannoL be doubLed,
conslderlng many cases of unleLLered persons or even
Lhose wlLh average lnLelllgence lnvarlably flndlng
Lhemselves ln no poslLlon whaLsoever Lo bargaln falrly
wlLh Lhelr credlLors. M0@=#&A& Q%&A]" () 2=+,"(%BB"-
D7D 0123 /PE 6CEEE9)
C

J"@"$ () 2=&">%=- DC4 0123 .DE 6CEEE9 " conLracL should be
consldered as a morLgage or as a loan lnsLead of pacLo de reLro
when lLs Lerms are amblguous or Lhe clrcumsLances are
lnconslsLenL wlLh a sale.
Q=B%+" () 1=#>$ =? 3@@A"B&- DE8 0123 E/ 6477D9 " lnLenLlon of
parLles ls showed by all surroundlng clrcumsLances, noL by Lhe
Lermlnology used ln Lhe conLracL.
LqulLable morLgage seeks Lo prevenL slLuaLlon where
necesslLous men, who are noL always free ln LhaL Lo answer a
presslng emergency, wlll submlL Lo any Lerm LhaL Lhe crafLy may
lmpose on Lhem. !"+," () !ABB=- P/C 0123 5.D 6477.9
o 8esldes, lL ls a facL LhaL ln Llme of grave flnanclal dlsLress
whlch render persons hard-pressed Lo meeL even Lhelr
baslc needs or answer an emergency, such persons
would have no cholce buL Lo slgn a deed of absoluLe
sale of properLy or a sale Lhereof wlLh pocto Je tetto lf
only Lo obLaln a much-needed loan from unscrupulous
money lenders. MQ"$"+,#%G"+ () 1=#>$ =? 3@@A"B&- 4/.
0123 D87 6CEE/9)
4


4. When resumed Lqu|tab|e Mortgage (Art|c|e 1602)

1
loo v. coott of Appeols, 273 SC8A 237 (1997).
2
5olooqo v. coocepcloo, 470 SC8A 291 (2003).
Genera| ku|e: LxlsLence of any one of Lhese condlLlons sufflces
Lo glve rlse Lo Lhe non-concluslve presumpLlon LhaL Lhe conLracL
ls an equlLable morLgage.
Lxcept|on: Art|c|e 1602 ls noL concluslve and may be rebuLLed
by compeLenL and saLlsfacLory proof Lo Lhe conLrary.
J%< () 1"B",#"& 6P. U)V) Z=) 8- @)DDEP9 " ln order for
presumpLlon Lo apply, Lhe parLles musL have lnLended Lhe
conLracL Lo be a morLgage and noL a pacLo de reLro.
Llm enumeraLes Lhe followlng clrcumsLances Lo LreaL Lhe
conLracL as an equlLable morLgage.
o 1erms used ln power-of-aLLorney lndlcaLe LhaL
conveyance was lnLended Lo be a loan secured by a
morLgage
o rlce pald ln relaLlon Lo value of properLy ls grossly
lnadequaLe
! Powever, mere allegaLlon of lnsufflclency of
selllng prlce does noL creaLe Lhe presumpLlon lf
Lhere ls no proof regardlng Lhe markeL values of
Lhe area and properLy ln quesLlon
lnadequacy of prlce: ConslderaLlon so
far shorL of Lhe real value as Lo sLarLle
Lhe mlnd.
Lven wlLh Lhe asserLlon LhaL Lhe prlce ln
a pacLo de reLro ls noL Lhe assessed
prlce, does noL [usLlfy Lhe concluslon
LhaL Lhe conLracL ls one of equlLable
morLgage.
o racLlce ln pacLo de reLro sale ls
Lo flx a relaLlvely reduced prlce
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Lo afford Lhe seller a reLro every
faclllLy Lo redeem Lhe properLy.
o Seller aL Llme of alleged sale was ln urgenL need of
money.
o Supposed seller lnvesLed money he obLalned ln maklng
lmprovemenLs on Lhe properLy sold.
o Seller remalned ln possesslon.
! AlLhough Lhe seller only remalned ln possesslon
for a year, such sLlpulaLlon dld noL deLracL from
Lhe facL LhaL possesslon (an lndlclum of
ownershlp) was reLalned by Lhe vendor, and
LhaL Lhe vendor reLalned parL of Lhe purchase
prlce.
! 1hls polnLed Lo an equlLable morLgage.
! ConLlnued possesslon where sellers promlsed Lo
vacaLe, buL dld noL. 1oleraLed possesslon ls noL
enough Lo prove equlLable morLgage.
o Seller pald land Lax
o 8uyer accepLed parLlal paymenLs, such accepLance
belng lncompaLlble wlLh ldea of lrrevocablllLy of Lhe LlLle
of ownershlp of Lhe purchaser aL Lhe explraLlon of Lhe
Lerm sLlpulaLed ln Lhe orlglnal conLracL for Lhe exerclse
of Lhe rlghL Lo redempLlon
o Seller remalned bound for Lhe repaymenL of Lhe money
o 1ransacLlon had orlgln ln a borrowlng of money.
! When Lrue lnLenLlon was noL Lo convey
ownershlp, buL Lo secure houslng loan of
buyer" ln whlch seller" had a dlrecL lnLeresL
slnce proceeds were Lo be applled Lo Lhelr
ouLsLandlng morLgage obllgaLlons. - LqulLable
MorLgage
! Alleged loan dlsbursed on lnsLallmenLs - no
proof as Lo lnadequacy of prlce - conLlnued
recelpL of renLals by seller was found Lo be a
gesLure of generoslLy : consldered sale on
lnsLallmenLs
o 1here was a prevlous debL beLween Lhe parLles LhaL was
noL exLlngulshed by Lhe sale buL remalned subslsLlng.
uelay ln Lransferrlng LlLle does noL glve rlse Lo presumpLlon.

S. 8adges of Lqu|tab|e Mortgage (Art|c|e 1602
1
)
A conLracL of sale acLually lnLended Lo secure Lhe paymenL of an
obllgaLlon ls presumed an equlLable morLgage. M2=<#B= ()
J"S#,- \>)- .7C 0123 454 647759)
4

1he presence of only one clrcumsLance deflned ln ArLlcle 1602 ls
sufflclenL for a conLracL of sale o tetto Lo be presumed an
equlLable morLgage) MY%B"I= () QAI"BB" D// 0123 4./ 647749)
D

1he presumpLlon ln ArLlcle 1602 [lbes wlLh Lhe rule LhaL Lhe law
favors Lhe leasL Lransmlsslon of properLy rlghLs. M^+>%K#AW- 0>) ()

1
llm v. coloqoos, 43 C.C. no. 8, p. 3394 (1948), 8oloteto v. lAc, 134 SC8A 330
(1987), Motlooo v. cA, 220 SC8A 716 (1993), lobtes v. cA, 331 SC8A 716 (2001).
2
Aysoo, It. v. lotoqos, 337 SC8A 30 (2008), 8ootlsto v. uoooqst, 337 SC8A 236
(2008).
3
clotovoll v. cA, 190 SC8A 439, 448 (1990), uy v. cA, 230 SC8A 664 (1994),
lobtes v. cA, 331 SC8A 716 (2001), Alvoto v. 1etolJo, 479 SC8A 288 (2006),
ulo v. IotJloes, 481 SC8A 226 (2006), koymooJo v. 8ooJooq, 326 SC8A 314
(2007), Alellqoy v. losetoo, 337 SC8A 699 (2007), uotoJo vJo. ue uelflo v.
uelloto, 342 SC8A 397 (2008), 8ootlsto v. uoooqst, 337 SC8A 236 (2008),
kockvllle xcell lotetootloool xlm cotp. v. collo, 602 SC8A 124 (2009), nelts of
Iose keyes, It. v. keyes, 626 SC8A 738 (2010).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
YA%>& =? 0@=#&A& Z%A(A& "+I 3B?>AI= !"BI=+"I=- PE8 0123 D5.
647759X buL lL ls noL concluslve, for lL may be rebuLLed by
compeLenL and saLlsfacLory proof Lo Lhe conLrary. M0"+$%",= ()
L%W=+- .PD 0123 P74 647789)
1he provlslons of ArLlcle 1602 on Lhe presumpLlon of equlLable
morLgage applles also Lo a conLracL purporLlng Lo be an absoluLe
sale. MR#"W=+ () 13- DPC 0123 /7/ 647779)
C

A conLracL purporLlng Lo be an absoluLe sale ls presumed Lo be
an equlLable morLgage: (a) when Lhe prlce of Lhe sale ls
unusually lnadequaLe,
2
(b) when Lhe vendor remalns ln
possesslon as lessee or oLherwlse,
3
(c) when afLer Lhe explraLlon
of Lhe rlghL of repurchase, lL ls exLended by Lhe buyer. MY%B"I=
() YA%>& =? 2"?"AB QAI"BB"- D/ 0123 4./ 647749X
P
(d) when Lhe
purporLed seller conLlnues Lo collecL renLals from Lhe lessees of
Lhe properLy sold. 2"<=& () L%W=+- PE8 0123 C/ 647759X (e)
when Lhe purporLed seller was ln desperaLe flnanclal slLuaLlon
when he execuLed Lhe purporLed sale. !"#$%&$" () *+"+,&$- ../
0123 4.5 647789X or under LhreaL of belng sued crlmlnally.
3S&=+- \>) N) H">","&- ../ 0123 .7 647789)
lnadequacy of purchase prlce" ls consldered so far shorL of Lhe
real value of Lhe properLy as Lo sLarLle a correcL mlnd. M0"+$%",=
() L%W=+- .PD 0123 P74 647789X or LhaL Lhe mlnd revolLs aL lL as
such LhaL a reasonable man would nelLher dlrecLly or lndlrecLly
be llkely Lo consenL Lo lL. MNI" IA 3B(">AW () 13- 4DC 0123 D7E

1
2omoto v.cA, 260 SC8A 10 (1996).
2
komolo v. loyoq, It., 301 SC8A262 (2006).
3
komolo v. loyoq, It., 301 SC8A262 (2006), Aysoo, It. v. lotoqos, 337 SC8A 30
(2008), 8ootlsto v. uoooqst, 337 SC8A 236 (2008), kockvllle xcell lotetootloool
xlm cotp. v. collo, 602 SC8A 124 (2009).
4
ctoz v. coott of Appeols, 412 SC8A 614 (2003).
6CEEP9X lL musL be grossly lnadequaLe or shocklng Lo Lhe
consclence. R%= () 3O"S"$"- ..5 0123 C/. 647789)
1o presume a conLracL ls an equlLable morLgaged based on
gross lnadequacy of prlce, lL musL be clearly shown from Lhe
evldence presenLed LhaL Lhe conslderaLlon was ln facL grossly
lnadequaLe aL Lhe Llme Lhe sale was execuLed. Mere lnadequacy
of prlce ls noL sufflclenL Lo creaLe Lhe presumpLlon. MUB%(">A& ()
0"><%A+$=- ..P 0123 D8P 647789)
.

Mere LoleraLed possesslon ls noL enough Lo prove LhaL Lhe
LransacLlon was an equlLable morLgage. M2AI=+I= () \%<A+AW-
.D5 0123 5DE 6477/9)
aymenL of real esLaLe Laxes ls a usual burden aLLached Lo
ownershlp, and when such paymenL ls coupled wlLh conLlnuous
possesslon of Lhe properLy, lL consLlLuLes evldence of greaL
welghL LhaL a person under whose name Lhe realLy Laxes were
declared has a valld and rlghL clalm over Lhe land. MV= ()
!";">=+- P/4 0123 44E 6477.9)
5

Powever mere allegaLlons wlLhouL proof Lo supporL lnadequacy
of prlce, or when conLlnued possesslon by Lhe seller ls
supporLed by a valld arrangemenL conslsLenL wlLh Lhe sale,
would noL supporL Lhe allegaLlon of equlLable morLgage.
M1%>AB=& () YA>+"+IAW- PE7 0123 54P 647759)
/

AlLhough under Lhe agreemenL Lhe seller shall remaln ln
possesslon of Lhe properLy for only one year, such sLlpulaLlon
does noL deLracL from Lhe facL LhaL possesslon of Lhe properLy,
an lndlclum of ownershlp, was reLalned by Lhe alleged vendor Lo

3
kloqs ltopettles cotp. v. CollJo, 606 SC8A 137 (2009).
6
lomoyoq v. nelts of Iocloto Nemeo, 326 SC8A 31 (2007).
7
Aosttlo v. Coozoles, It., 420 SC8A 414 (2004).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
quallfy Lhe arrangemenL as an equlLable morLgage, especlally
when lL was shown LhaL Lhe vendor reLalned parL of Lhe
purchase prlce) MJA,"&@% () U+,- P.E 0123 C44 6477.9)
C

under ArLlcle 1602, delay ln Lransferrlng LlLle ls noL one of Lhe
lnsLances enumeraLed by law-lnsLances ln whlch an equlLable
morLgage can be presumed. nor does Lhe facL LhaL Lhe orlglnal
LransacLlon on Lhe land was Lo supporL a loan, whlch when lL
was noL pald on due daLe was negoLlaLed lnLo a sale, wlLhouL
evldence LhaL Lhe subsequenL deed of sale does noL express Lhe
Lrue lnLenLlons of Lhe parLles, glve rlse Lo a presumpLlon of
equlLable morLgage. M1AO"BB=& () T+$A&$"$A ^&$"$A =? $GA J"$A
^<%,I%= QA>;"I=- PD7 0123 D4D 6477P9)
1he facL LhaL Lhe prlce ln a pocto Je tetto sale ls noL Lhe Lrue
value of Lhe properLy does noL [usLlfy Lhe concluslon LhaL Lhe
conLracL ls one of equlLable morLgage, ln facL a pocto Je tetto
sale, Lhe pracLlce ls Lo flx a relaLlvely reduced prlce Lo afford Lhe
seller o tetto every faclllLy Lo redeem Lhe properLy . MT,+";%= ()
13- 4P5 0123 4P4 6CEE.9)
4

ArLlcle 1602 belng remedlal ln naLure, may be applled
reLroacLlvely ln cases prlor Lo Lhe effecLlvlLy of Lhe Clvll Code.
MUBA" () 13- 4P/ 0123 4/P 6CEE.9)

6. App||cab|||ty 1o Deeds Cf Abso|ute Sa|e (Art|c|e 1604)
1wo requlslLes for Art|c|e 1604 (ln relaLlon Lo Art|c|e 1602) Lo
apply

1
Otooce v. cA, 298 SC8A 133 (1998).
2
ue Ocompo v. llm, 38 hll. 379 (1918), lellclooo v. llmjoco, 41 hll.147 (1920),
8eloolo v. Movello, 103 hll. 736 (1939).
a. arLles enLered lnLo conLracL denomlnaLed as a conLracL
of sale.
b. lnLenLlon was Lo secure an exlsLlng debL by way of
morLgage.

7. roof 8y aro|e Lv|dence, 8est Lv|dence ku|e
1haL ls why parol evldence ls compeLenL and admlsslble ln
supporL of Lhe allegaLlons LhaL an lnsLrumenL ln wrlLlng,
purporLlng on lLs face Lo Lransfer Lhe absoluLe LlLle Lo properLy,
or Lo Lransfer Lhe LlLle wlLh a rlghL Lo repurchase under speclfled
condlLlons reserved Lo Lhe seller, was ln LruLh and ln facL glven
merely as securlLy for Lhe repaymenL of a loan. MQ">%"+= ()
1=#>$ =? 3@@A"B&- 447 0123 /C5 6CEED9)
D

Q"$"+,#%G"+ () 1=#>$ =? 3@@A"B&- 4/. 0123 D87 6CEE/9
o arol evldence ls compeLenL Lo prove LhaL Lhe
lnsLrumenL ln quesLlon was glven merely as a securlLy.
o upon proof of Lhe LruLh of such allegaLlons, courL wlll
enforce Lhe agreemenL as Lhey Lruly lnLended.
3#&$>%" () V=+W"BA& P47 0123 PCP 6477P9 " non-appllcaLlon of
besL evldence rule" Lo equlLable morLgage slLuaLlons.
o ueclslve facLor ln evaluaLlng lnLenL ln such agreemenLs
ls noL always Lhe documenL lLself.
o 8uL all Lhe surroundlng clrcumsLances. 1hus, parole
evldence ls accepLable.

3
llm v. coloqoos, 43 C.C. no. 8, p. 3394 (1948), coyoqoo v. 5ootos, 34 hll. 100
(1916), Motooqolboo v. cA, 273 SC8A 380 (1997), nlloJo v. nelts of kofoel
MeJllo, 37 SC8A 237 (2002), MoJtlqol v. coott of Appeols, 436 SC8A 639
(2003), leqospl v. Ooq, 439 SC8A 122 (2003), 8ooqo v. 8ello, 471 SC8A 633
(2003), ulo v. IotJloes, 481 SC8A 226 (2006), Aysoo, It. v. lotoqos, 337 SC8A
30 (2008).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

8. kemed|es A||owed Ior Lqu|tab|e Mortgage (Art|c|es 14S4,
1602, 160S)

Art|c|e 14S4.
If an abso|ute conveyance of property |s made |n order to secure the
performance of an ob||gat|on of the grantor toward the grantee, a
trust by v|rtue of |aw |s estab||shed. If the fu|f|||ment of the ob||gat|on
|s offered by the grantor when |t becomes due, he may demand the
reconveyance of the property to h|m.

Art|c|e 160S.
In the cases referred to |n art|c|es 1602 and 1604, the apparent vendor
may ask for the reformat|on of the |nstrument.
(n)

When a conLracL ls consLrued Lo be an equlLable morLgage, Lhe
followlng may resulL:
o Any money, frulL or beneflL Lo be recelved by Lhe buyer
as renL shall be consldered as lnLeresL sub[ecL Lo usury
laws,
o 1he apparenL Seller" may ask for reformaLlon of Lhe
lnsLrumenL,
o CourL may decree LhaL buyer"-debLor musL pay hls
ouLsLandlng loan Lo seller"-credlLor
o Where Lrlal courL dld noL pass upon Lhe morLgagor's
clalm LhaL he pald Lhe morLgage obllgaLlon, a remand of
Lhe case Lo Lrlal courL ls ln order
! 1o deLermlne wheLher Lhe morLgage had been
seLLled.
! And lf noL, how much morLgagor should pay Lo
seLLle Lhe same.
ln Lhe case of an equlLable morLgage, alLhough ArLlcle 1603
whlch allows for Lhe remedy of reformaLlon, noLhlng Lhereln
precludes an aggrleved parLy from pursulng oLher remedles Lo
effecLlvely proLecL hls lnLeresL and recover hls properLy, such as
an acLlon for declaraLlon of nulllLy of Lhe deed of sale and
speclflc performance) MR=BA+$%+= () 1=#>$ =? 3@@A"B&- D85 0123
D5 647749)
o CLv: Powever, nulllflcaLlon proposed by 1olenLlno
would be unfalr - lL would leave buyer wlLhouL Lhe
necessary securlLy conLracL, whlch remalns valld.
8eformaLlon should be Lhe proper remedy Lo enforce
Lrue lnLenLlon. 8uL, ln Lhe evenL properLy had been sold
Lo a Lhlrd parLy, nulllflcaLlon of LhaL sale and
reconveyance should be allowed provlded securlLy
arrangemenL over Lhe properLy ls preserved.
lf a sale a reLro ls consLrued Lo be an equlLable morLgage,
execuLlon of an affldavlL of consolldaLlon ls of no consequence,
and consLrucLlve possesslon" would noL rlpen Lo ownershlp
slnce such was noL ln concepL of an owner. !"B"$A>= ()
T+$A><AI%"$A 3@@ABB"$A 1=#>$- C.P 0123 .D7 6CE8/9
ln an equlLable morLgage slLuaLlon, Lhe consolldaLlon of
ownershlp ln Lhe person of Lhe morLgagee ln equlLy upon fallure
of Lhe morLgagor ln equlLy Lo pay Lhe obllgaLlon, would amounL
Lo a poctom commlssotlom. 1he only proper remedy ls Lo cause
Lhe foreclosure of Lhe morLgage ln equlLy) M!>%=+A&_N"&K#AW ()
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
1=#>$ =? 3@@A"B&- P.7 0123 5PP 6477.9X or Lo deLermlne lf Lhe
prlnclpal obllgaLlon secured by Lhe equlLable morLgage has been
pald or seLLled. M!"+," () !ABB=- P/C 0123 5.D 6477.9)
LxplraLlon of perlod of redempLlon" ln an equlLable morLgage
does noL prevenL Lhe purporLed seller from exLlngulshlng Lhe
maln conLracL of loan, and Lhus also Lhe equlLable morLgage
conLracL.
o As long as foreclosure has noL been done.

9. H";$#< 1=<<%&&=>%#< (Art|c|e 2088)

Art|c|e 2088.
1he cred|tor cannot appropr|ate the th|ngs g|ven by way of p|edge or
mortgage, or d|spose of them. Any st|pu|at|on to the contrary |s nu||
and vo|d. (18S9a)

A sLlpulaLlon whlch ls a poctom commlsotlom enables Lhe
morLgagee Lo acqulre ownershlp of Lhe morLgaged properLles
wlLhouL need of any foreclosure proceedlngs-lL ls a nulllLy
belng conLrary Lo Lhe provlslons of ArLlcle 2088 of Lhe Clvll
Code. MJ#<"S", () YA%>& =? \";%+$= ZA<A]=- .45 0123 DC.
6477/9)
C

1he elemenLs of poctom commlssotlom, whlch enable Lhe
morLgagee Lo acqulre ownershlp of Lhe morLgaged properLy
wlLhouL Lhe need of any foreclosure proceedlngs, are: (1) Lhere

1
Coetteto v. lqo, 96 hll. 37 (1934), Mootevltqlo v. cA, 112 SC8A 641 (1982),
vJo. Je 2oloeto v. Octovlooo, 121 SC8A 314 (1983), Ooq v. koboo leoJloq
cotp., 337 SC8A 316 (2008), nelts of Iose keyes, It. v. keyes, 626 SC8A 738
(2010).
should be a properLy morLgaged by way of securlLy for Lhe
paymenL of Lhe prlnclpal obllgaLlon, and (2) Lhere should be a
sLlpulaLlon for auLomaLlc approprlaLlon by Lhe credlLor of Lhe
Lhlng morLgaged ln case of non-paymenL of Lhe prlnclpal
obllgaLlon wlLhln Lhe sLlpulaLed perlod. U+, () 2=O"+ JA+I%+,
1=>@)- ../ 0123 .C5 647789)
lL does noL apply when Lhe securlLy for a debL ls also money ln
Lhe form of Llme deposlL. M1=+&%+, () 13- C// 0123 CP 6CE8E9)
NI") IA `#B#A$" () U;$"(%"+=- C4C 0123 DCP 6CE8D9
o SLlpulaLlon: upon redempLlon by buyer from Lhlrd parLy,
LhaL lnsLrumenL would be consldered a deed of absoluLe
sale from seller Lo buyer. AnoLher lnsLrumenL was
execuLed enLlLled opLlon Lo repurchase."
o 1hls was noL a sale a reLro as Lhe opLlon Lo repurchase
was ln a separaLe documenL.
o nelLher was lL an equlLable morLgage as lL was noL
meanL Lo secure a loan - no appllcaLlon of Art|c|e 1602.
o SC: lL was noL a pacLum commlssorlum elLher
! Seller was noL a debLor
! noLhlng was offered as securlLy.
o ubllc ollcy on pacLum commlssorlum applles only
when Lhe LransacLlon ls a morLgage or oLher securlLy
conLracL - no appllcaLlon Lo a Lrue sale or Lransfer
LransacLlon.
V#A>>A>= () []%,=- E5 HG%B) D/ 6CE.P9 " morLgage wlLh
condlLlonal sale"
o SLlpulaLlon: MorLgagor reserved for hlmself Lhe rlghL Lo
redeem properLy by paylng back Lhe amounL loaned. Cn
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
fallure of morLgagor Lo exerclse such rlghL, LlLle would
pass and be vesLed ln Lhe morLgagee.
o SC: Such sLlpulaLlon cannoL be consLrued as glvlng
morLgagee rlghL Lo own Lhe properLy upon fallure of Lhe
morLgagor Lo pay. 1hls ls vold for belng pacLum
commlssorlum.
Q=+$A(%>,%+ () 1=#>$ =? 3@@A"B&- CC4 0123 5PC 6CE849
o LqulLable morLgage gulsed as a sale a reLro cannoL be
enforced as a sale
o When a purporLed sale a reLro ls found Lo be an
equlLable morLgage, Lhe proper remedy ln case Lhe
borrower does noL pay Lhe prlce" ls Lo foreclose on Lhe
morLgage.
! 1here can be no loss of Lhe seller's" rlghL Lo
redeem for LhaL would be pacLum
commlssorlum.
! 8eLurn of redempLlon prlce would be equaL Lo
paylng Lhe prlnclpal loan, Lhus exLlngulshlng Lhe
equlLable morLgage.
1he provlslon ln a MCA/uocloo eo loqo wlLh a 8lghL Lo
8epurchase LhaL ln Lhe evenL Lhe borrower falls Lo comply wlLh
Lhe new Lerms of resLrucLurlng Lhe loan, Lhe agreemenL shall
auLomaLlcally operaLe Lo be an lnsLrumenL of docloo eo poqo
wlLhouL need of execuLlng any new documenL does noL
consLlLuLe poctom commlssotlom. 0=B%I Y=<A&- T+;) () 1=#>$ =?
3@@A"B&- 4/. 0123 45/ 6CEE/9X Lhe quesLloned conLracLs were
freely and volunLarlly execuLed by peLlLloners and respondenL ls
of no momenL, poctom commlssotlom belng vold for belng
prohlblLed by law. U+, () 2=O"+ JA+I%+, 1=>@)- ../ 0123 .C5
647789)

0=B%I Y=<A& () 1=#>$ =? 3@@A"B&

Iacts: Solld Pomes execuLed ln favor of SLaLe llnanclng CenLer a 8eal
LsLaLe MorLgage on lLs properLles embraced ln Lhe 1C1, ln order Lo
secure Lhe paymenL of a loan of 10M whlch Lhe former obLalned from
Lhe laLLer.

A year laLer, Solld Pomes applled for and was granLed an addlLlonal loan
of 1, 311,270.03 by SLaLe llnanclng, and Lo secure lLs paymenL, Solld
execuLed an amendmenL Lo real esLaLe morLgage whereby Lhe credlLs
secured by Lhe flrsL morLgage on Lhe abovemenLloned properLles were
lncreased from 10M Lo 11,311,270.03.
Solld homes obLalned addlLlonal credlLs and flnanclng faclllLles from
SLaLe llnanclng ln Lhe sum of 1,499,811.97 and Lo secure lLs paymenL,
Lhe former execuLed Lhe amendmenL Lo real esLaLe morLgage whereby
Lhe morLgage execuLed on lLs properLles was agaln amended so LhaL Lhe
loans or credlLs secured Lhereby were furLher lncreased from 11,311,
270.03 Lo 13,011,082.00.

When Lhe obllgaLlons became due and payable, SLaLe llnanclng made
repeaLed demands upon Solld homes for Lhe paymenL Lhereof, buL Lhe
laLLer falled Lo do so.

SLaLe llnanclng flled a peLlLlon for exLra[udlclal foreclosure of Lhe
morLgages who ln pursuance of Lhe peLlLlon, lssued a noLlce of sherlff's
sale whereby Lhe morLgaged properLles of Solld homes and Lhe
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
lmprovemenLs exlsLlng Lhereon, lncludlng Lhe v.v. Sollven 1owers ll
8ulldlng were seL for publlc aucLlon sale ln order Lo saLlsfy Lhe full
amounL of Solld homes' morLgage lndebLedness, Lhe lnLeresL Lhereon,
and Lhe fees and expenses lncldenLal Lo Lhe foreclosure proceedlngs.

8efore Lhe scheduled publlc aucLlon sale, Lhe morLgagor Solld homes
made represenLaLlons and lnduced SLaLe llnanclng Lo forego wlLh Lhe
foreclosure of Lhe real esLaLe morLgage. 8y reason Lhereof, SLaLe
llnanclng agreed Lo suspend Lhe foreclosure of morLgaged properLles,
sub[ecL Lo Lhe Lerms and condlLlons Lhey agreed upon, and ln pursuance
of Lhe sald agreemenL, Lhey execuLed a documenL enLlLled
MLMC8AnuuM Cl AC8LLMLn1/uAClCn Ln ACC.


Issue:
1. WheLher or noL Lhe memorandum of agreemenL/daclon en
pago execuLed by Lhe parLles ls valld and blndlng " ?LS
2. WheLher or noL solld homes can clalm damages arlslng from Lhe
non-annoLaLlon of lLs rlghL of repurchase ln Lhe consolldaLed
LlLles " nC

ne|d: 1he Memorandum of AgreemenL/uaclon Ln ago was valld and
blndlng, and LhaL Lhe reglsLraLlon of sald lnsLrumenL ln Lhe 8eglsLer of
ueeds was ln accordance wlLh law and Lhe agreemenL of Lhe parLles.

Solld homes uLLerly falled Lo prove LhaL respondenL corporaLlon had
mallclously and ln bad falLh caused Lhe non-annoLaLlon of peLlLloner's
rlghL of repurchase so as Lo prevenL Lhe laLLer from exerclslng such rlghL.
Cn Lhe conLrary, lL ls admlLLed by boLh parLles LhaL SLaLe llnanclng
lnformed Solld homes of Lhe reglsLraLlon wlLh Lhe reglsLer of deeds of
Lhelr memorandum of agreemenL/daclon en pago and Lhe lssuance of
Lhe new cerLlflcaLes of LlLle ln Lhe name of SLaLe llnanclng.

Clearly, peLlLloner was noL pre[udlced by Lhe non- annoLaLlon of such
rlghL ln Lhe cerLlflcaLes of LlLle lssued ln Lhe name of SLaLe llnanclng.
Also, lL was noL Lhe funcLlon of Lhe corporaLlon Lo cause sald
annoLaLlon. lL was equally Lhe responslblllLy of peLlLloner Lo proLecL lLs
own rlghLs by maklng sure LhaL lLs rlghL of repurchase was lndeed
annoLaLed ln Lhe consolldaLed LlLles of SLaLe llnanclng.

1he only legal Lransgresslon of SLaLe was lLs fallure Lo observe Lhe
proper procedure ln effecLlng Lhe consolldaLlon of Lhe LlLles ln lLs name.
8uL Lhls does noL auLomaLlcally enLlLle Lhe peLlLloner Lo damages absenL
convlnclng proof of mallce and bad falLh on Lhe parL of prlvaLe
respondenL-corporaLlon.

Doctr|ne:

8U1 SLLa 1he sLlpulaLlon ln Lhe promlssory noLe provldlng LhaL
upon fallure of Lhe makers Lo pay lnLeresLs, ownershlp of Lhe
properLy would auLomaLlcally be Lransferred Lo Lhe payee, and
Lhe coverlng deed of sale would be reglsLered ls ln subsLance a
poctom commlssotlom ln vlolaLlon of ArLlcle 2088, and
consequenLly, Lhe resulLanL sale ls vold and Lhe reglsLraLlon and
obLalnlng of new LlLle ln Lhe name of Lhe buyer would have be
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
declared vold also. 3) b>"+;%&;= 2A"B$S () 1=#>$ =? 3@@A"B&- 4E8
0123 DPE 6CEE89.
1


3) b>"+;%&;= 2A"B$S () 1=#>$ =? 3@@A"B&

Iacts: A. lranclsco 8ealLy and uevelopmenL Corp. granLed a loan worLh
7.3M ln favor of spouses !avlllonar, Lo whlch Lhe laLLer execuLed Lhree
documenLs: a) a promlssory noLe conLalnlng Lhe lnLeresL charge of 4
monLhly, b) a deed of morLgage over Lhe sub[ecL properLy, c) an
undaLed deed of sale of Lhe morLgaged properLy. Slnce Lhe spouses
allegedly falled Lo comply wlLh Lhe paymenLs, peLlLloner reglsLered Lhe
sale ln lLs favor, geLLlng a 1C1 lssued ln lLs name wlLhouL knowledge by
Lhe spouses. SubsequenLly, Lhe spouses obLalned anoLher loan worLh
2.3M, slgnlng anoLher promlssory noLe ln favor of peLlLloner. eLlLloner
demanded Lhe possesslon of Lhe properLy, as well as Lhe lnLeresL
paymenLs, Lo whlch Lhe spouses refused Lo comply. eLlLloner flled an
acLlon for possesslon ln Lhe 81C. 81C ruled ln favor of peLlLloner, buL CA
reversed.

Issue: WheLher or noL Lhe sale was consldered as an equlLable morLgage

ne|d: ?LS. 1he Lransfer was ln Lhe naLure of pacLum commlssorlum,
slnce Lhe sale was really consldered as an equlLable morLgage. lL was
really lnLended by Lhe spouses Lo make such undaLed deed of sale a
securlLy. Also, when peLlLloners Lransferred Lhe LlLle ln lLs name, Lhe
spouses was never lnformed of such acLlon. Such Lransfer was Lherefore
vold, maklng Lhe 1C1 held by peLlLloners null and vold as well.

1
leqospl v. Ooq, 439 SC8A 122 (2003).

Doctr|ne:

10. I|na| Chance to kedeem |n "M|staken Lqu|tab|e Mortgage"
(Art|c|e 1606)

Art|c|e 1606.
1he r|ght referred to |n art|c|e 1601, |n the absence of an express
agreement, sha|| |ast four years from the date of the contract.

Shou|d there be an agreement, the per|od cannot exceed ten years.

nowever, the vendor may st||| exerc|se the r|ght to repurchase w|th|n
th|rty days from the t|me f|na| [udgment was rendered |n a c|v|| act|on
on the bas|s that the contract was a true sa|e w|th r|ght to repurchase.
(1S08a)

Grant Cf 30-Day kedempt|on k|ght In Case Cf L|t|gat|on And
Art|c|e 1606: LxplraLlon of perlod lpso [ure exLlngulshes rlghL Lo
redeem. Powever, when Lhere was a prevlous sulL concernlng
Lhe naLure of Lhe conLracL, Lhe seller may sLlll exerclse rlghL Lo
repurchase wlLhln 30-days from Lhe Llme flnal [udgmenL was
rendered
o 1he 30-day perlod conLemplaLes a case lnvolvlng a
conLroversy as Lo Lhe naLure of Lhe conLracL. CourL
decldes wheLher lL ls a pacLo de reLro or an equlLable
morLgage. R"@"& () 1=#>$ =? 3@@A"B&- 5E 0123 DED
6CE/59)
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
o 1he 30-day perlod under ArLlcle 1606 does noL apply lf
Lhe courLs should flnd Lhe sale Lo be absoluLe.
H"+,%B%+"+ () 2"<=&- C8C 0123 D.E 6CEE79)
kat|ona|e Ior 30-Day er|od
o Seller may have consldered Lhe sale Lo be an equlLable
morLgage. 8elng such, Lhe seller has every rlghL Lo
exLlngulsh Lhe equlLable morLgage by paylng-up Lhe
loan aL any Llme before Lhe buyer has foreclosed on Lhe
morLgage.
o Allowlng Lhe explraLlon of Lhe redempLlon perlod ls
conslsLenL wlLh hls clalm LhaL Lhe sale was an equlLable
morLgage.
o 1hus, upon flndlng of Lhe courL LhaL lL was lndeed a
pacLo de reLro, Lhen Lhe seller musL be granLed a flnal
30-day perlod wlLhln whlch Lo declde and lf ever,
exerclse hls rlghL Lo redeem.
Powever: lf lssue was wheLher Lhe conLracL was an absoluLe
sale or sale a reLro
o !udgmenL of sale a reLro does noL glve Lhe seller Lhe 30-
day perlod.
o ln such a case, seller ls negllgenL for noL exerclslng Lhe
rlghL Lo redeem.
Sellers ln a sale [udlclally declared as pocto Je tetto may noL
exerclse Lhe rlghL Lo repurchase wlLhln Lhe 30-day perlod
provlded under ArLlcle 1606, alLhough Lhey have Laken Lhe
poslLlon LhaL Lhe same was an equlLable morLgage, lf lL ls shown
LhaL Lhere was no honesL bellef Lhereof slnce: (a) none of Lhe
clrcumsLances under ArLlcle 1602 were shown Lo exlsL Lo
warranL a concluslon LhaL Lhe LransacLlon was an equlLable
morLgage, and (b) LhaL lf Lhey Lruly belleved Lhe sale Lo be an
equlLable morLgage, as a slgn of good falLh, Lhey should have
conslgned wlLh Lhe Lrlal courL Lhe amounL represenLlng Lhelr
alleged loan, on or before Lhe explraLlon of Lhe rlghL Lo
repurchase. 3O%BB" () V=O=+&A+,- D/P 0123 .C 647749.
1


3O%BB" () V=O=+&A+,

Iacts: Spouses Abllla lnsLlLuLed agalnsL Spouses Cobonseng an acLlon for
speclflc performance, recovery of sum of money and damages, seeklng
Lhe relmbursemenL of Lhe expenses Lhey lncurred ln Lhe preparaLlon
and reglsLraLlon of 2 publlc lnsLrumenLs-- ueed of Sale and CpLlon Lo
8uy. As a defense, Spouses Cobonseng conLended LhaL Lhe LransacLlon
covered by Lhese lnsLrumenLs was a morLgage. 81C ruled ln favor of
Spouses Abllla, sLaLlng LhaL lL was a sale glvlng Spouses Cobonseng unLll
AugusL 31, 1983 wlLhln whlch Lo buy back Lhe 17 loLs sub[ecL of Lhe sale.
CA afflrmed and held LhaL Lhe LransacLlon was a pacLo de reLro sale, and
noL an equlLable morLgage.
ln 1999, Spouses Cobonseng flled wlLh Lhe 81C an urgenL moLlon Lo
repuchase Lhe loLs wlLh Lender of paymenL, whlch was denled.
Powever, afLer Lhe [udge lnhlblLed hlmself from Lhe case, lL was
reraffled Lo a dlfferenL branch, whlch granLed Lhe moLlon Lo repurchase.

Issue: WheLher or noL Spouses Cobonseng may exerclse Lhe rlghL Lo
repurchase, as sLlpulaLed ln ArLlcle 1606(3).

ne|d: nC. Sellers ln a sale [udlclally-declared as pacLo de reLro may nC1

1
vJo. Je Mocoy v. cA, 206 SC8A 244 (1992).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
exerclse Lhe rlghL Lo repurchase wlLhln Lhe 30-day perlod provlded
under ArLlcle 1606, alLhough Lhey have Laken Lhe poslLlon LhaL Lhe same
was an equlLable morLgage, lf lL shown LhaL Lhere was no honesL bellef
Lhereof slnce: (a) none of Lhe clrcumsLances under ArLlcle 1602 were
shown Lo exlsL Lo warranL a concluslon LhaL Lhe LransacLlon was an
equlLable morLgage, and (b) LhaL lf Lhey Lruly belleved Lhe sale Lo be an
equlLable morLgage, as a slgn of good falLh, Lhey should have conslgned
wlLh Lhe Lrlal courL Lhe amounL represenLlng Lhelr alleged loan, on or
before Lhe explraLlon of Lhe rlghL Lo repurchase.

Doctr|ne:

An equlLable morLgage ls a voldable conLracL. lL may be
annulled wlLhln four (4) years from Lhe Llme Lhe cause of acLlon
accrues. 3S&=+- \>) () H">","&- ../ 0123 .7 647789) :1JNa
RGA>A"?$A>- %$ <"S OA A+?=>;AI ","%+&$ $GA @>=(%&%=+ =+
@";$#< ;=<<%&&=>%#<cd

11. Ie|gn|ng Lqu|tab|e Mortgage S|tuat|on to Ava|| of Art|c|e 1606
WhaL lf seller felgns defense of equlLable morLgage ln order Lo
geL Lhe 30-day perlod?
Where evldence esLabllshed no honesL doubL as Lo parLles'
lnLenLlons Lo make lL a sale pacLo de reLro, seller would noL be
enLlLled Lo ArLlcle 1606's beneflLs. 3I=>"OBA () T+";"B"- C7D
0123 P8C 6CE.89
1here musL be honesL bellef on parL of vendor LhaL Lhe
agreemenL was ln reallLy a morLgage, merely Lo glve securlLy for
an obllgaLlon. NI") LA Q";=S () 1=#>$ =? 3@@A"B&- 475 0123
4PP 6CEE49 and bAB%;A+ () U>%"&- C.5 0123 .85 6CE8/9
When sale ls [udlclally declared pacLo de reLro, and afLer
vendors Lake Lhe poslLlon LhaL lL was an equlLable morLgage,
havlng no honesL bellef Lo LhaL effecL - vendors may noL avall of
Lhe addlLlonal 30-day perlod. 3O%BB" () V=O=+&A+,- D/P 0123
P4E 647749
o lf Lhey Lruly belleved LhaL Lhe sale was an equlLable
morLgage, Lhey should have conslgned wlLh Lhe Lrlal
courL Lhe amounL represenLlng Lhe alleged loan.
Powever, Lhls was reversed. ArLlcle 1606 only applles when Lhe
naLure of Lhe LransacLlon was puL ln lssue before Lhe courL.
o lL applles ln a slLuaLlon where one parLy clalms LhaL lL
was a pacLo de reLro, and Lhe oLher clalmed LhaL lL was
an equlLable morLgage, and Lhe courLs declded LhaL lL
was a pacLLo de reLro sale.
o Powever, appllcablllLy sLlll resLs on Lhe bona flre lnLenL
of Lhe seller a reLro, lf he Lruly belleved LhaL Lhe
LransacLlon was an equlLable morLgage.
o lL doesn'L maLLer whaL Lhe buyer lnLended Lhe
LransacLlon Lo be.

III. Lega| kedempt|on

A. Def|n|t|on (Art|c|e 1619)

Art|c|e 1619.
Lega| redempt|on |s the r|ght to be subrogated, upon the same terms
and cond|t|ons st|pu|ated |n the contract, |n the p|ace of one who
acqu|res a th|ng by purchase or dat|on |n payment, or by any other
transact|on whereby ownersh|p |s transm|tted by onerous t|t|e.
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
(1S21a)

Legal redempLlon ls ln Lhe naLure of a prlvllege creaLed by law
parLly for reasons of publlc pollcy and parLly for Lhe beneflL and
convenlence of Lhe redempLloner, Lo afford hlm a way ouL of
whaL mlghL be a dlsagreeable or [an] lnconvenlenL assoclaLlon
lnLo whlch he has been LhrusL. lL ls lnLended Lo mlnlmlze co-
ownershlp. MbA>+"+IAW () R">#+- DEC 0123 5.D 647749)
C


1. kat|ona|e Ior Lega| kedempt|on
8easons of publlc pollcy
8eneflL and convenlence of redempLloner, Lo afford hlm a way
ouL of whaL mlghL be an lnconvenlenL assoclaLlon
lnLended Lo mlnlmlze co-ownershlp
o Law granLs a co-owner Lhe exerclse of sald rlghL of
redempLlon when shares of oLher owners are sold Lo a
Lhlrd person
Cnce properLy ls subdlvlded and dlsLrlbuLed among Lhe co-
owners, no more reason Lo susLaln any rlghL of legal
redempLlon. 3(%B" () !">"O"$- P8. 0123 8 647759

2. Sa||ent D|st|nct|ons 8etween Convent|ona| And Lega| k|ght Cf
kedempt|on

Convent|ona| ("r|ght a retro") Lega| ("subrogat|on")
Can only be consLlLuLed by express
reservaLlon ln a conLracL of sale aL
uoes noL have Lo be expressly
reserved, covers oLher onerous

1
8oso v. Aqollot, 117 SC8A 128 (1982).
Llme of perfecLlon Lransfers of LlLle
ln favor of Lhe seller Clven Lo a Lhlrd-parLy Lo Lhe sale.
Lxerclse exLlngulshes Lhe
underlylng conLracL of sale, as
Lhough Lhere was never any
conLracL aL all
ConsLlLuLes a new sale ln
subsLlLuLlon of Lhe orlglnal sale

8. Lega| kedempt|on k|ghts Under 1he C|v|| Code
1. Among Co-ne|rs (Art|c|e 1088)

Art|c|e 1088.
Shou|d any of the he|rs se|| h|s hered|tary r|ghts to a stranger before
the part|t|on, any or a|| of the co-he|rs may be subrogated to the r|ghts
of the purchaser by re|mburs|ng h|m for the pr|ce of the sa|e, prov|ded
they do so w|th|n the per|od of one month from the t|me they were
not|f|ed |n wr|t|ng of the sa|e by the vendor. (1067a)

no rlghL of legal redempLlon avallable Lo co-helrs when sale
covers a parLlcular properLy of Lhe esLaLe.
8edempLlon rlghL perLaln Lo dlsposlLlon of rlghL Lo lnherlL, and
noL when Lhere ls a sale of a parLlcular properLy of Lhe esLaLe.
MHB"+ () T+$A><AI%"$A 3@@ABB"$A 1=#>$- CD. 0123 4/7 6CE8.9)
When Lhe helrs have parLlLloned Lhe esLaLe among Lhemselves
and each have occupled and LreaLed deflnlLe porLlons Lhereof as
Lhelr own, co-ownershlp has ceased even Lhough Lhe properLy ls
sLlll under one LlLle, and Lhe sale by one of Lhe helrs of hls
deflnlLe porLlon cannoL Lrlgger Lhe rlghL of redempLlon ln favor
of Lhe oLher helrs) MNI") LA 3@A () 1=#>$ =? 3@@A"B&- P.5 0123
CED 6477.9)
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
1he helrs who acLually parLlclpaLed ln Lhe execuLlon of Lhe
exLra[udlclal seLLlemenL, whlch lncluded Lhe sale Lo a Lhlrd
person of Lhelr pto loJlvlso shares ln Lhe properLy, are bound by
Lhe same, whlle Lhe co-helrs who dld noL parLlclpaLe are glven
Lhe rlghL Lo redeem Lhelr shares pursuanL Lo ArLlcle 1088. M1#"
() N">,"&- .75 0123 D/P 647759)

2. Among Co-Cwners (Art|c|e 1620)

Art|c|e 1620.
A co-owner of a th|ng may exerc|se the r|ght of redempt|on |n case the
shares of a|| the other co-owners or of any of them, are so|d to a th|rd
person. If the pr|ce of the a||enat|on |s gross|y excess|ve, the
redempt|oner sha|| pay on|y a reasonab|e one.

Shou|d two or more co-owners des|re to exerc|se the r|ght of
redempt|on, they may on|y do so |n proport|on to the share they may
respect|ve|y have |n the th|ng owned |n common. (1S22a)

1he rlghL of redempLlon may be exerclsed by a co-owner only
when parL of Lhe communlLy properLy ls sold Lo a sttooqet, now
when sold Lo anoLher co-owner because a oew parLlclpanL ls noL
added Lo Lhe co-ownershlp. MbA>+"+IAW () R">#+- DEC 0123 5.D
647749)
o Should Lwo or more co-owners deslre Lo exerclse Lhe
rlghL of redempLlon, Lhey may do so only ln proporLlon
Lo Lhe share Lhey have ln Lhe co-owned Lhlng.
o 8lghL of redempLlon of co-owners excludes ad[olnlng
owners. ArLlcle 1623(2)
When Lhe seller o tetto dles, Lhe rlghL Lo redeem cannoL be
exerclsed by a co-helr alone, slnce Lhe rlghL Lo redeem belonged
ln common Lo all Lhe helrs. MLA V#W<"+ () 1=#>$ =? 3@@A"B&-
CP8 0123 /. 6CE8/9)
8edempLlon by co-owner redounds Lo Lhe beneflL of all oLher
co-owners. MQ">%"+= () 1=#>$ =? 3@@A"B&- 444 0123 /D5 6CEED9X
and Lhe 30-day perlod for Lhe commencemenL of Lhe rlghL Lo
exerclse Lhe legal redempLlon rlghL, even when such rlghL has
been recognlzed Lo exlsL ln a flnal and execuLory courL declslon,
does noL begln from Lhe enLry of [udgmenL, buL from Lhe
wrlLLen noLlce served by Lhe seller Lo Lhe parLy enLlLled Lo
exerclse such redempLlon rlghL. V#%BBA+ () 1=#>$ =? 3@@A"B&- .8E
0123 DEE 6477E9)
1he requlslLes for Lhe exerclse of legal redempLlon are as
follows: (1) Lhere musL be co-ownershlp, (2) one of Lhe co-
owners sold hls rlghL Lo a sLranger, (3) Lhe sale was made before
Lhe parLlLlon of Lhe co-owned properLy, (4) Lhe rlghL of
redempLlon musL be exerclsed by one or more co-owners wlLhln
a perlod of LhlrLy days Lo be counLed from Lhe Llme he or Lhey
were noLlfled ln wrlLlng by Lhe co-owner vendor, and (3) Lhe
vendee musL be relmbursed Lhe prlce of Lhe sale. 1"B<" ()
0"+$=&- .E7 0123 D.E 6477E9)

3. Lffect Cf De Iacto art|t|on Among Co-ne|rs And Co-Cwners
When Lhe helrs have parLlLloned Lhe esLaLe among Lhemselves
and each have occupled and LreaLed deflnlLe porLlons Lhereof as
Lhelr own, co-ownershlp has ceased even Lhough Lhe properLy ls
sLlll under one LlLle, and Lhe sale by one of Lhe helrs of hls
deflnlLe porLlon cannoL Lrlgger Lhe rlghL of redempLlon ln favor
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
of Lhe oLher helrs. NI") LA 3@A () 1=#>$ =? 3@@A"B&- P.5 0123
CED 6477.9
lor Lhe rlghL of redempLlon Lo be exerclsed, co-ownershlp musL
exlsL aL Lhe Llme of Lhe conveyance ls made by a co-owner and
Lhe redempLlon ls demanded by Lhe oLher co-owner or co-
owners. M3(%B" () !">"O"$- P8. 0123 8 647759)

4. D|st|ngu|sh|ng 8etween k|ght Cf kedempt|on Cf Co-ne|rs And
Co-Cwners -
ArLlcle 1620 lncludes Lhe docLrlne LhaL a redempLlon by a co-
owner of Lhe properLy owned ln common, even when he uses
hls own fund, wlLhln Lhe perlod prescrlbed by law lnures Lo Lhe
beneflL of all Lhe oLher co-owners. M3++%A R"+ () 1=#>$ =?
3@@A"B&- C/4 0123 557 6CE8E9)
C

ArLlcle 1088, Lhe helr may redeem for hlmself Lhe heredlLy
rlghLs sold by a co-helr.
Q">%"+= () 1=#>$ =? 3@@A"B&- 447 0123 /C5 6CEED9 " co-helr
exerclsed legal redempLlon over parcel of land belonglng Lo
esLaLe of decedenL. 1hus, whlch redempLlon clause Lo apply?
o ulsLlncLlon beLween 1088 and 1620
o When sake of parLlcular properLy or lnLeresL ln
properLy, ArLlcle 1620.
o When sale of heredlLary rlghL lLself, ArLlcle 1088.

S. Among Ad[o|n|ng Cwners Cf kura| Lands (Art|c|es 1621)

Art|c|e 1621.

1
ue Cozmoo v. cA, 148 SC8A 73 (1987), AJllle v. cA, 137 SC8A 433 (1988).
1he owners of ad[o|n|ng |ands sha|| a|so have the r|ght of redempt|on
when a p|ece of rura| |and, the area of wh|ch does not exceed one
hectare, |s a||enated, un|ess the grantee does not own any rura| |and.

1h|s r|ght |s not app||cab|e to ad[acent |ands wh|ch are separated by
brooks, dra|ns, rav|nes, roads and other apparent serv|tudes for the
benef|t of other estates.

If two or more ad[o|n|ng owners des|re to exerc|se the r|ght of
redempt|on at the same t|me, the owner of the ad[o|n|ng |and of
sma||er area sha|| be preferred, and shou|d both |ands have the same
area, the one who f|rst requested the redempt|on. (1S23a)

8lghL of redempLlon covers only resale" and does noL cover
exchanges or barLer of properLles. LA 0"+$=& () 1%$S =? Q"+%B"-
P. 0123 P7E 6CE/49)
8equlslLe Lo show properLy prevlously boughL on speculaLlon"
dropped. MJA,"&@% () 13- 5E 0123 D57 6CE/59)
8lghL of redempLlon covers only resale" and does noL cover
exchanges or barLer of properLles xue 5ootos v. clty of Moollo,
43 SC8A 409 (1972), and cannoL arlse unless boLh ad[acenL
lands are rural lands. MH>%<">S 0$>#;$#>A& 1=>@) () N"BA+;%"- P7E
0123 D/C 6477D9)
When Lhere ls no lssue LhaL when Lhe ad[olnlng lands lnvolved
are boLh rural lands, Lhen Lhe rlghL of redempLlon can be
exerclsed and Lhe only exempLlon provlded ls when Lhe buyer
can show LhaL he dld noL own any oLher rural land. 8uL Lhe
burden of proof Lo provlde for Lhe excepLlon lles wlLh Lhe buyer.
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
MH>%<">S 0$>#;$#>A& 1=>@) () N"BA+;%"- P7E 0123 D/C- D/P
6477D9)

6. Among Ad[o|n|ng Cwners of Urban Land (Art|c|e 1622)

Art|c|e 1622.
Whenever a p|ece of urban |and wh|ch |s so sma|| and so s|tuated that
a ma[or port|on thereof cannot be used for any pract|ca| purpose
w|th|n a reasonab|e t|me, hav|ng been bought mere|y for specu|at|on,
|s about to be re-so|d, the owner of any ad[o|n|ng |and has a r|ght of
pre-empt|on at a reasonab|e pr|ce.

If the re-sa|e has been perfected, the owner of the ad[o|n|ng |and sha||
have a r|ght of redempt|on, a|so at a reasonab|e pr|ce.

When two or more owners of ad[o|n|ng |ands w|sh to exerc|se the r|ght
of pre-empt|on or redempt|on, the owner whose |ntended use of the
|and |n quest|on appears best [ust|f|ed sha|| be preferred. (n)

U>$A," () U>;%+A- D8 0123 4/5 6CE/C9 " Lhe purpose of Lhls
provlslon ls Lo dlscourage speculaLlon ln real esLaLe and Lhe
aggravaLlon of Lhe houslng problems.
o urban" " refers Lo Lhe characLer of Lhe communlLy or
vlclnlLy ln whlch Lhe land ls found.
8edempLlon of urban land only applles when Lhere ls resale
o no rlghL of redempLlon when urban land ls Lransferred
under exchange" of properLles.
JA,"&@% () 1=#>$ =? 3@@A"B&- 5E 0123 D57 6CE/59 " pracLlcally
dld away wlLh requlremenL of havlng purchased land prevlously
for speculaLlon.
0A+ H= ^e Q">eA$%+, () Q">$%+AW- D4. 0123 4C7 647779 held
LhaL ArLlcle 1622 only deals wlLh small urban lands boughL for
speculaLlon.
o 8lghL does noL apply Lo a lessee Lrylng Lo buy Lhe land
he ls leaslng.

7. Sa|e of Cred|t |n L|t|gat|on (Art|c|e 1634) - D7 I"S& ?>=< +=$%;A
=? IA<"+I $= @"S.

Art|c|e 1634.
When a cred|t or other |ncorporea| r|ght |n ||t|gat|on |s so|d, the debtor
sha|| have a r|ght to ext|ngu|sh |t by re|mburs|ng the ass|gnee for the
pr|ce the |atter pa|d therefor, the [ud|c|a| costs |ncurred by h|m, and
the |nterest on the pr|ce from the day on wh|ch the same was pa|d.

A cred|t or other |ncorporea| r|ght sha|| be cons|dered |n ||t|gat|on from
the t|me the comp|a|nt concern|ng the same |s answered. 1he debtor
may exerc|se h|s r|ght w|th|n th|rty days from the date the ass|gnee
demands payment from h|m. (1S3S)

C. When er|od of Lega| kedempt|on 8eg|ns (Art|c|e 1623)

Art|c|e 1623.
1he r|ght of |ega| pre-empt|on or redempt|on sha|| not be exerc|sed
except w|th|n th|rty days from the not|ce |n wr|t|ng by the prospect|ve
vendor, or by the vendor, as the case may be. 1he deed of sa|e sha||
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
not be recorded |n the keg|stry of roperty, un|ess accompan|ed by an
aff|dav|t of the vendor that he has g|ven wr|tten not|ce thereof to a||
poss|b|e redempt|oners.

1he r|ght of redempt|on of co-owners exc|udes that of ad[o|n|ng
owners. (1S24a)

1. k|nd Cf Not|ce Contemp|ated 8y Law
8oLh Lhe leLLer and Lhe splrlL of Lhe law argue agalnsL any
aLLempL Lo wlden Lhe scope of Lhe noLlce speclfled ln Lhe Clvll
Code Lo lnclude any oLher klnd of noLlce, such as verbal or by
reglsLraLlon. Q">%+"= () 1=#>$ =? 3@@A"B&- 444 0123 /D5
6CEED9)
C

o nelLher Lhe reglsLraLlon of Lhe sale M1"O>A>" ()
N%BB"+#A("- C57 0123 54/ 6CE889, nor Lhe annoLaLlon of
an adverse clalm MNI") LA 3@A () 1=#>$ =? 3@@A"B&- P.5
0123 CED 6477.9, nor noLlce belng glven by Lhe clLy
Lreasurer MNA>I"I () 1=#>$ =? 3@@A"B&- 4.5 0123 .ED
6CEE59, comply wlLh Lhe wrlLLen noLlce requlred under
ArLlcle 1623 Lo begln Lhe Lolllng of Lhe 30-day perlod of
redempLlon.
1he wrlLLen noLlce of sale ls mandaLory, noLwlLhsLandlng acLual
knowledge of a co-owner, ln order Lo remove all uncerLalnLles
abouL Lhe sale, lLs Lerms and condlLlons, as well as lLs efflcacy
and sLaLus) MNA>I"I () 1=#>$ =? 3@@A"B&- 4.5 0123 .ED 6CEE59)
noLlce Lo mlnors may valldly be served upon parenLs even when
Lhe laLLer have noL been [udlclally appolnLed as guardlans slnce

1
cltloq netooez v. netooez, 32 hll. 214 (1913), costlllo v. 5omoote, 106 hll.
1024 (1960).
Lhe same ls beneflclal Lo Lhe chlldren. M!"I%BB= () bA>>A>- C.4
0123 P7/ 6CE8/9)
1he noLlce requlred under ArLlcle 1623 ls deemed Lo have been
complled wlLh when Lhe oLher co-owner has slgned Lhe ueed of
LxLra[udlclal arLlLlon and Lxchange of Shares whlch embodles
Lhe dlsposlLlon of parL of Lhe properLy owned ln common.
MbA>+"+IAW () R">#+- DEC 0123 5.D 647749)
1he exlsLence of a clause ln Lhe deed of sale Lo Lhe effecL LhaL
Lhe vendor has complled wlLh Lhe provlslons of ArLlcle 1623,
cannoL be Laken Lo belng Lhe wrlLLen afflrmaLlon under oaLh,
as well as Lhe evldence, LhaL Lhe requlred wrlLLen noLlce Lo
peLlLloner under ArLlcle 1623 has been meeL, for Lhe person
enLlLled Lo Lhe rlghL ls noL a parLy Lo Lhe deed of sale. MH>%<">S
0$>#;$#>A& 1=>@) () N"BA+;%"- P7E 0123 D/C 6477D9)

2. Count|ng Cf 1he er|od
1he 30-day perlod for Lhe commencemenL of Lhe rlghL Lo
exerclse Lhe legal redempLlon rlghL, even when such rlghL has
been recognlzed Lo exlsL ln a flnal and execuLory courL declslon,
does noL begln from Lhe enLry of [udgmenL, buL from Lhe
wrlLLen noLlce served by Lhe seller Lo Lhe parLy enLlLled Lo
exerclse such redempLlon rlghL) V#%BBA+ () 1=#>$ =? 3@@A"B&- .8E
0123 DEE 6477E9)
1he lnLerpreLaLlon of ArLlcle 1623 where Lhere ls a need for
noLlce ln wrlLlng, should always LllL ln favor of Lhe redempLloner
and agalnsL Lhe buyer, slnce Lhe purpose ls Lo reduce Lhe
number of parLlclpanLs unLll Lhe communlLy ls LermlnaLed, belng
a hlndrance Lo Lhe developmenL and beLLer admlnlsLraLlon of
Lhe properLy. lL ls a one-way sLreeL," ln favor of Lhe
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
redempLloner slnce he can compel Lhe buyer Lo sell Lo hlm buL
he cannoL be compelled by Lhe vendee Lo buy. MYA><=&= ()
1=#>$ =? 3@@A"B&- D77 0123 .C5 6CEE89)

3. Not|ce Must Cover erfected Sa|e
1he 30-day perlod does noL begln Lo run ln Lhe absence of
wrlLLen noLlflcaLlon comlng from Lhe seller. M1#" () N">,"&- .75
0123 D/P 647759X
C
and lL musL be a wrlLLen noLlce of a perfecLed
sale. M0@=#&A& L=>=<"B () 1=#>$ =? 3@@A"B&- 55 0123 ./.
6CE/.9)
noLlce musL be wlLh execuLlon and dellvery of Lhe deed of sale.
o erlod should noL be deemed Lo have commenced
unless noLlce ls made afLer execuLlon of formal deed of
dlsposal.
1hls docLrlne cannoL be applled Lo legal pre-empLlon.

4. Summat|on Cn Str|ct ku|es Cn Art|c|e 1623 Concern|ng Not|ce
b>"+;%&;= () !=%&A>, DD4 0123 D7. 647779, summarlzed Lhe case-
law on ArLlcle 1623, and wlLh deflnlLlveness declared:
o lor Lhe 30-day redempLlon perlod Lo begln Lo run,
noLlce musL be glven by Lhe seller, and LhaL noLlce glven
by Lhe buyer or even by Lhe 8eglsLer of ueeds ls noL
sufflclenL. 1hls expressly afflrms Lhe orlglnal rullng ln
!#$$A () Q"+#AB *S "+I 0=+&- T+;)- P 0123 .45 6CE549-
as afflrmed ln M0"B"$"+I=B () 2A$A&- C54 0123 .58
6CE889) 1hls expressly overruled Lhe rullng ln M^$;#O"+

1
Cotclo v. colollmoo, 17 SC8A 201 (1989), Motlooo v. coott of Appeols, 222
SC8A 736 (1993).
() 13- CP8 0123 .7/ 6CE8/9- whlch allowed Lhe glvlng of
noLlce by Lhe buyer Lo be effecLlve under ArLlcle 1623,
o When noLlce ls glven by Lhe proper parLy (l.e., Lhe
seller), no parLlcular form of wrlLLen noLlce ls prescrlbed
under ArLlcle 1623, so LhaL Lhe furnlshlng of Lhe coples
of Lhe deeds of sale Lo Lhe co-owner would be
sufflclenL, as held prevlously %+ ML%&$>%$= () 13- CE/
0123 575 6CEEC9X 1=+AfA>= () 13- C5 0123 //. 6CE559X
M!"I%BB= () bA>>A>- C.4 0123 P7/ 6CE8/9- buL only on Lhe
form of glvlng noLlce buL noL on Lhe rullng of who ls Lhe
proper parLy Lo glve noLlce,
o Afflrmed rullng ln M3B=+W= () T+$A><AI%"$A 3@@ABB"$A
1=#>$- C.7 0123 4.E 6CE8/9- LhaL Lhe flllng of Lhe sulL
for e[ecLmenL or collecLlon of renLals agalnsL a co-owner
acLually dlspenses wlLh Lhe need for a wrlLLen noLlce,
and musL be consLrued as commenclng Lhe runnlng of
Lhe perlod Lo exerclse Lhe rlghL of redempLlon, slnce Lhe
flllng of Lhe sulL amounLed Lo acLual knowledge of Lhe
sale from whlch Lhe 30-day perlod of redempLlon
commences Lo run.

b>"+;%&;= () !=%&A>

Iacts: eLlLloner Adalla lranclsco and Lhree of her slsLers, LsLer,
LllzabeLh, and Adelulsa, were co-owners of four parcels of reglsLered
land ln Caloocan ClLy. Cn AugusL 1979, Lhey sold 1/3 of Lhelr undlvlded
share Lo Lhelr moLher, Adela 8las, for h10,000, maklng her a co-owner
of Lhe real properLy Lo LhaL exLenL.

!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
7 years laLer, ln 1986, however, Adela sold her 1/3 share for h10,000
Lo respondenL Zenalda 8olser, anoLher slsLer of peLlLloner.
ln 1992 or 6 years afLer Lhe sale, Adalla recelved summons wlLh a copy
of a complalnL by Zenalda demandlng her share ln Lhe renLals belng
collecLed from Lhe LenanLs of Lhe 1en CommandmenLs 8ulldlng, whlch
sLands on Lhe co-owned properLy. Adalla Lhen lnforms Zenalda LhaL she
was exerclslng her rlghL of redempLlon as co-owner of Lhe sub[ecL
properLy, deposlLlng for LhaL purpose h10,000 wlLh Lhe Clerk of CourL
1he case was however dlsmlssed afLer Zenalda was declared non-sulLed,
and Adalla's counLerclalm was Lhus dlsmlssed as well.

3 years afLer, Adalla lnsLlLuLes a complalnL demandlng Lhe redempLlon
of Lhe properLy, conLendlng LhaL Lhe 30- day perlod for redempLlon
under ArL. 1623 had noL begun Lo run agalnsL her or any of Lhe oLher co-
owners, slnce Lhe vendor Adela dld noL lnform Lhem abouL Lhe sale,
whlch facL Lhey only came Lo know of when Adalla recelved Lhe
summons ln 1992. Zenalda on Lhe oLher hand conLends LhaL Adalla
already knew of Lhe sale even before she recelved Lhe summons slnce
Zenalda had lnformed Adalla by leLLer of Lhe sale wlLh a demand for her
share of Lhe renLals Lhree monLhs before flllng sulL, aLLachlng Lo lL a
copy of Lhe deed of sale. Adalla's recelpL of Lhe sald leLLer ls proven by
Lhe facL LhaL wlLhln a week, she advlsed Lhe LenanLs of Lhe bulldlng Lo
dlsregard Zenalda's leLLer-demand. 1he Lrlal courL dlsmlssed Lhe
complalnL for legal redempLlon, holdlng LhaL ArL. 1623 does noL
prescrlbe any parLlcular form of noLlfylng co-owners on appeal, Lhe CA
afflrmed.

Issue: WheLher or noL Lhe leLLer-demand by Zenalda Lo Adalla, Lo whlch
Lhe deed of sale was aLLached, can be consldered as sufflclenL
compllance wlLh Lhe noLlce requlremenL of ArLlcle 1623 for Lhe purpose
of legal redempLlon.

ne|d: 1he peLlLloner polnLs ouL LhaL Lhe case does noL concern Lhe
parLlcular form ln whlch such noLlce musL be glven, buL raLher Lhe
sufflclency of noLlce glven by a vendee ln lleu of Lhe requlred noLlce Lo
be glven by Lhe vendor or prospecLlve vendor.

1he LexL of ArLlcle 1623 clearly and expressly prescrlbes LhaL Lhe 30 days
for maklng Lhe redempLlon shall be counLed from noLlce ln wrlLlng by
Lhe vendor lL makes sense Lo requlre LhaL noLlce be glven by Lhe vendor
and nobody else, slnce Lhe vendor of an undlvlded lnLeresL ls ln Lhe besL
poslLlon Lo know who are hls co-owners, who under Lhe law musL be
noLlfled of Lhe sale.

noLlce by Lhe co-owner llkewlse removes all doubL as Lo Lhe facL of Lhe
sale, lLs perfecLlon, and lLs valldlLy by noL lmmedlaLely noLlfylng, or noL
noLlfylng aL all, a co- owner, Lhe vendor can delay or even effecLlvely
prevenL Lhe meanlngful exerclse of Lhe rlghL of redempLlon.

Powever, lL would be un[usL ln Lhe case aL bar Lo requlre Lhe vendor
Adela Lo serve noLlce of Lhe sale, when Lhe facL has already been
esLabllshed ln boLh lower courLs Adalla has effecLlvely exerclsed her
rlghL when she deposlLed Lhe 10,000 redempLlon prlce 7 days afLer
recelvlng Lhe summons.

S. kare Lxcept|ons:
3B=+W= () T+$A><AI%"$A 3@@ABB"$A 1=#>$- C.7 0123 4.E 6CE8/9
As An Lxcept|on 1o Art|c|e 1088
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
o SlLuaLlon where co-helrs llved wlLh purchaser ln Lhe
same loL, buL Lhe acLlon was broughL only afLer 13 years
of knowlng abouL Lhe same. 1he co-helrs are deemed Lo
have recelved acLual noLlce of Lhe same (even lf no
wrlLLen noLlce). Laches seems Lo be Lhe maln prlnclpal.
o When Lhe buyers Look possesslon of Lhe properLy
lmmedlaLely afLer Lhe execuLlon of Lhe deed of sale ln
Lhelr favor and llved ln Lhe mldsL of Lhe oLher co-owners
who never quesLloned Lhe same. MH%B"@%B () 13- 4.7
0123 .57 6CEE.9)
Lxcept|on 1o 1he Lxcept|on (|.e. Lxcept|on 1o 1he A|onzo
Doctr|ne) When Lhe sale Lo Lhe buyer was effecLed Lhrough Lhe
co-owner who acLed as Lhe broker, and never lndlcaLed LhaL he
would exerclse hls rlghL Lo redeem. ML%&$>%$= () 13- CE/ 0123
575 6CEEC9)
NA>I"I () 1=#>$ =? 3@@A"B&- 4.5 0123 .ED 6CEE59 g Alonzo and
ulsLrlLo are speclal excepLlons
o Co-owner learned of Lhe sale Lhrough clLy Lreasurer
o Per exerclse of rlghL of redempLlon was Llmely: no
wrlLLen noLlce of sale was ever glven Lo her, Lhus Lhe 30-
day perlod had noL yeL run.

Summat|on Cn Str|ct ku|es Cn Not|ce

A. YA><=&= () 1=#>$ =? 3@@A"B&- D77 0123 .C5 6CEE89) noLlce ln wrlLlng
ls needed ln 3 oLher specles of legal redempLlon
1. Case where share of co-owners are sold Lo a Lhlrd person
2. 8edempLlon of ad[olnlng rural land
3. 8edempLlon of ad[olnlng urban land.
lnLerpreLaLlon ln Lhese cases LllLs ln favor of Lhe redempLloner.
1he wrlLLen noLlce of sale ls mandaLory, noLwlLhsLandlng acLual
knowledge of a co-owner, ln order Lo remove all uncerLalnLles
abouL Lhe sale, lLs Lerms and condlLlons, as well as lLs efflcacy
and sLaLus. NA>I"I () 1=#>$ =? 3@@A"B&- 4.5 0123 .ED 6CEE59
o WrlLLen noLlce requlred was enacLed Lo remove all
doubLs abouL Lhe allenaLlon.

8. b>"+;%&;= () !=%&A>- DD4 0123 D7. 647779 g 8equlremenLs under
Art|c|e 1623
1. noLlce musL be glven by seller ln order for 30-day redempLlon
perlod Lo run.
2. no parLlcular form ls prescrlbed.
3. llllng of sulL for e[ecLmenL or collecLlon of renLals dlspenses
wlLh need for wrlLLen noLlce - flllng of Lhe sulL amounLs Lo
acLual knowledge of Lhe sale.
CLher co-owner slgns deed of parLlLlon embodylng dlsposlLlon
of properLy - proper noLlce) bA>+"+IAW () R">#+- DEC 0123 5.D
647749

D. Cther Lega| kedempt|on k|ghts
1. kedempt|on |n atents (Sec. 119, C.A. 141)

CCMMCNWLAL1n AC1 NC. 141
Sect|on 119.
Lvery conveyance of |and acqu|red under the free patent or
homestead prov|s|ons, when proper, sha|| be sub[ect to repurchase by
the app||cant, h|s w|dow, or |ega| he|rs, w|th|n a per|od of f|ve years
from the date of the conveyance.
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01

Sale wlLhln 3 years vold even when ln favor of homesLeader's
own chlld.
8lghL Lo repurchase ls granLed by law and need noL be provlded
for ln Lhe deed of sale. M!A>%+ () 1=#>$ =? 3@@A"B&- CEP 0123
.78 6CEEC9)
Genera| ku|e: under Lhe free paLenL or homesLead provlslons of
Lhe ubllc Land AcL a perlod of flve (3) years from Lhe daLe of
conveyance ls provlded, Lo be reckoned from Lhe daLe of Lhe
sale and noL from Lhe daLe of reglsLraLlon ln Lhe offlce of Lhe
8eglsLer of ueeds) MJAA 1G#S 2A"B$S 1=>@) () 13- 4.7 0123 .E5
6CEE.9)
C

o Lxcept|on: Where homesLead was sold aL exLra[udlclal
foreclosure, 3 year perlod beglns Lo run afLer explraLlon
of one year perlod of repurchase allowed ln
exLra[udlclal foreclosure.
SecLlon 119 of ubllc Land acL should be read wlLh ArLlcle 1616
of new Clvll Code - Lhere should be a reLurn of Lhe prlce/Lender
of paymenL.
o Mere noLlce of lnLenL Lo redeem ls lnsufflclenL.

2. kedempt|on |n 1ax Sa|es (Sec. 21S, NIkC of 1997)

NA1ICNAL IN1LkNAL kLVLNUL CCDL CI 1997
Sect|on 21S. Iorfe|ture to Government for Want of 8|dder.
In case there |s no b|dder for rea| property exposed for sa|e as here|n
above prov|ded or |f the h|ghest b|d |s for an amount |nsuff|c|ent to

1
Moto v. coott of Appeols, 318 SC8A 416 (1999).
pay the taxes, pena|t|es and costs, the Interna| kevenue Cff|cer
conduct|ng the sa|e sha|| dec|are the property forfe|ted to the
Government |n sat|sfact|on of the c|a|m |n quest|on and w|th|n two (2)
days thereafter, sha|| make a return of h|s proceed|ngs and the
forfe|ture wh|ch sha|| be spread upon the records of h|s off|ce. It sha||
be the duty of the keg|ster of Deeds concerned, upon reg|strat|on w|th
h|s off|ce of any such dec|arat|on of forfe|ture, to transfer the t|t|e of
the property forfe|ted to the Government w|thout the necess|ty of an
order from a competent court.

W|th|n one (1) year from the date of such forfe|ture, the taxpayer, or
any one for h|m may redeem sa|d property by pay|ng to the
Comm|ss|oner or the |atter's kevenue Co||ect|on Cff|cer the fu||
amount of the taxes and pena|t|es, together w|th |nterest thereon and
the costs of sa|e, but |f the property be not thus redeemed, the
forfe|ture sha|| become abso|ute.

3. kedempt|on by Iudgment Debtor (Secs. 27-28, ku|e 39, ku|es
of C|v|| rocedure)

1997 kULLS CI CIVIL kCCLDUkL
Sect|on 27. Who may redeem rea| property so so|d.
kea| property so|d as prov|ded |n the |ast preced|ng sect|on, or any
part thereof so|d separate|y, may be redeemed |n the manner
here|nafter prov|ded, by the fo||ow|ng persons:

(a) 1he [udgment ob||gor, or h|s successor |n |nterest |n the who|e or
any part of the property,

!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
(b) A cred|tor hav|ng a ||en by v|rtue of an attachment, [udgment or
mortgage on the property so|d, or on some part thereof, subsequent
to the ||en under wh|ch the property was so|d. Such redeem|ng
cred|tor |s termed a redempt|oner. (29a)

Sect|on 28. 1|me and manner of, and amounts payab|e on, success|ve
redempt|ons, not|ce to be g|ven and f||ed.
1he [udgment ob||gor, or redempt|oner, may redeem the property
from the purchaser, at any t|me w|th|n one (1) year from the date of
the reg|strat|on of the cert|f|cate of sa|e, by pay|ng the purchaser the
amount of h|s purchase, w|th the per centum per month |nterest
thereon |n add|t|on, up to the t|me of redempt|on, together w|th the
amount of any assessments or taxes wh|ch the purchaser may have
pa|d thereon after purchase, and |nterest on such |ast named amount
at the same rate, and |f the purchaser be a|so a cred|tor hav|ng a pr|or
||en to that of the redempt|oner, other than the [udgment under wh|ch
such purchase was made, the amount of such other ||en, w|th |nterest.

roperty so redeemed may aga|n be redeemed w|th|n s|xty (60) days
after the |ast redempt|on upon payment of the sum pa|d on the |ast
redempt|on, w|th two per centum thereon |n add|t|on and the amount
of any assessments or taxes wh|ch the |ast redempt|oner may have
pa|d thereon after redempt|on by h|m, w|th |nterest on such |ast
named amount, and |n add|t|on, the amount of any ||ens he|d by sa|d
|ast redempt|oner pr|or to h|s own, w|th |nterest. 1he property may be
aga|n, and as often as a redempt|oner |s so d|sposed, redeemed from
any prev|ous redempt|oner w|th|n s|xty (60) days after the |ast
redempt|on, on pay|ng the sum pa|d on the |ast prev|ous redempt|on,
w|th two per centum thereon |n add|t|on, and the amounts of any
assessments or taxes wh|ch the |ast prev|ous redempt|oner pa|d after
the redempt|on thereon, w|th |nterest thereon, and the amount of any
||ens he|d by the |ast redempt|oner pr|or to h|s own, w|th |nterest.

Wr|tten not|ce of any redempt|on must be g|ven to the off|cer who
made the sa|e and a dup||cate f||ed w|th the reg|stry of deeds of the
p|ace, and |f any assessments or taxes are pa|d by the redempt|oner or
|f he has or acqu|res any ||en other than that upon wh|ch the
redempt|on was made, not|ce thereof must |n ||ke manner be g|ven to
the off|cer and f||ed w|th the reg|stry of deeds, |f such not|ce be not
f||ed, the property may be redeemed w|thout pay|ng such
assessments, taxes, or ||ens. (30a)

under SecLlon 28, 8ule 39 of Lhe 1997 8ules of Clvll rocedure,
Lhe perlod of redempLlon shall be aL any Llme wlLhln one (1)
year from Lhe daLe of reglsLraLlon of Lhe cerLlflcaLe of sale," so
LhaL Lhe perlod ls now Lo be undersLood as composed of 363
days, unllke Lhe 360 days under Lhe old provlslons of Lhe 8ules
of CourL. M[&<"AB () 13- DC8 0123 4C. 6CEEE9)
ln execuLlon sales, Lhe sherlff does noL warranL Lhe LlLle Lo Lhe
properLy sold by hlm and lL ls noL lncumbenL on hlm Lo place Lhe
purchaser ln possesslon of Lhe properLy.
o 1he rule of caveaL empLor applles Lo execuLlon sales.
WrlLLen noLlce musL be glven Lo Lhe [udgmenL debLor before Lhe
sale of Lhe properLy on execuLlon, Lo glve hlm Lhe opporLunlLy
Lo prevenL Lhe sale by paylng Lhe [udgmenL debL soughL Lo be
enforced and Lhe cosLs whlch have been lncurred. MR=>>A& ()
1"OB%+,- 4/. 0123 D4E 6CEE/9)
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
Where Lhere ls a Lhlrd-parLy clalm, sherlff should demand from
Lhe [udgmenL credlLor who becomes Lhe hlghesL bldder,
paymenL ln cash of hls bld lnsLead of merely credlLlng Lhe
amounL Lo Lhe parLlal saLlsfacLlon of Lhe [udgmenL debL)
MR=>>A& () 1"OB%+,- 4/. 0123 D4E 6CEE/9)

4. kedempt|on |n Lxtra[ud|c|a| Iorec|osure (Sec. 6, Act 313S)

AC1 NC. 313S
Sect|on 6.
In a|| cases |n wh|ch an extra[ud|c|a| sa|e |s made under the spec|a|
power here|nbefore referred to, the debtor, h|s successors |n |nterest
or any [ud|c|a| cred|tor or [udgment cred|tor of sa|d debtor, or any
person hav|ng a ||en on the property subsequent to the mortgage or
deed of trust under wh|ch the property |s so|d, may redeem the same
at any t|me w|th|n the term of one year from and after the date of the
sa|e, and such redempt|on sha|| be governed by the prov|s|ons of
sect|ons four hundred and s|xty-four to four hundred and s|xty-s|x,
|nc|us|ve, of the Code of C|v|| rocedure, |n so far as these are not
|ncons|stent w|th the prov|s|ons of th|s Act.

1hls ls Lhe Genera| ku|e
8efore Lhe explraLlon of Lhe 1-year redempLlon perlod wlLhln
whlch Lhe [udgmenL-debLor or morLgagor may redeem Lhe
properLy, Lhe purchaser Lhereof ls noL enLlLled, as a maLLer of
rlghL, Lo Lhe possesslon of Lhe sub[ecL maLLer.
1he CourL may allow Lhe purchaser Lo recelve Lhe renLals of Lhe
purchased properLy, buL Lhe purchaser ls accounLable Lo Lhe
[udgmenL-debLor for LhaL amounL, and may be credlLed agalnsL
Lhe redempLlon prlce when Lhe sald [udgmenL debLor or
morLgagor effecLs Lhe redempLlon.
1he redempLlon of exLra-[udlclally foreclosed properLles ls
exerclsed wlLhln one (1) year from Lhe daLe of Lhe aucLlon sale
as provlded for ln AcL 3133. MJAA 1G#S 2A"B$S 1=>@) () 13- 4.7
0123 .E5 6CEE.9)
1he execuLlon of a Jocloo eo poqo by sellers effecLlvely walves
Lhe redempLlon perlod normally glven a morLgagor) Mb%>&$
VB=O"B 2A"B$S "+I LA() 1=>@) () 0"+ 3,#&$%+- D// 0123 DPC
647749)

S. kedempt|on In Iud|c|a| Iorec|osure Cf Mortgage (Sec. 47, k.A.
8791)

kLU8LIC AC1 NC. 8791
Sect|on 47. Iorec|osure of kea| Lstate Mortgage.
In the event of forec|osure, whether [ud|c|a||y or extra-[ud|c|a||y, of
any mortgage on rea| estate wh|ch |s secur|ty for any |oan or other
cred|t accommodat|on granted, the mortgagor or debtor whose rea|
property has been so|d for the fu|| or part|a| payment of h|s ob||gat|on
sha|| have the r|ght w|th|n one year after the sa|e of the rea| estate, to
redeem the property by pay|ng the amount due under the mortgage
deed, w|th |nterest thereon at rate spec|f|ed |n the mortgage, and a||
the costs and expenses |ncurred by the bank or |nst|tut|on from the
sa|e and custody of sa|d property |ess the |ncome der|ved therefrom.
nowever, the purchaser at the auct|on sa|e concerned whether |n a
[ud|c|a| or extra-[ud|c|a| forec|osure sha|| have the r|ght to enter upon
and take possess|on of such property |mmed|ate|y after the date of
the conf|rmat|on of the auct|on sa|e and adm|n|ster the same |n
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
accordance w|th |aw. Any pet|t|on |n court to en[o|n or restra|n the
conduct of forec|osure proceed|ngs |nst|tuted pursuant to th|s
prov|s|on sha|| be g|ven due course on|y upon the f|||ng by the
pet|t|oner of a bond |n an amount f|xed by the court cond|t|oned that
he w||| pay a|| the damages wh|ch the bank may suffer by the en[o|n|ng
or the restra|nt of the forec|osure proceed|ng.

Notw|thstand|ng Act 313S, [ur|d|ca| persons whose property |s be|ng
so|d pursuant to an extra[ud|c|a| forec|osure, sha|| have the r|ght to
redeem the property |n accordance w|th th|s prov|s|on unt||, but not
after, the reg|strat|on of the cert|f|cate of forec|osure sa|e w|th the
app||cab|e keg|ster of Deeds wh|ch |n no case sha|| be more than three
(3) months after forec|osure, wh|chever |s ear||er. Cwners of property
that has been so|d |n a forec|osure sa|e pr|or to the effect|v|ty of th|s
Act sha|| reta|n the|r redempt|on r|ghts unt|| the|r exp|rat|on.

SecLlon 47(1) refers Lo foreclosures by banklng lnsLlLuLlons.
SecLlon 47(2) ls Lhe LxcepLlon Lo AcL 3133.
A sLlpulaLlon Lo render Lhe rlghL Lo redeem defeaslble by an
opLlon Lo buy on Lhe parL of Lhe credlLor. 0=>%"+= () !"#$%&$"- 5
0123 EP5 6CE549.

0=>%"+= () !"#$%&$"

Iacts: 8auLlsLa spouses morLgaged Lhelr loL Lo Sorlano, who Look
possesslon Lhereof and culLlvaLed Lhe same. ursuanL Lo ar. 3 of Lhelr
agreemenL, Sorlano declded Lo buy Lhe loL. 8auLlsLa refused Lo sell
clalmlng LhaL belng morLgagors, Lhey cannoL be deprlved of Lhelr rlghL
Lo redeem Lhe properLy.

Issue: WheLher or noL Sorlano may buy Lhe morLgaged properLy of
8auLlsLa

ne|d: ?LS. 1rue LhaL Lhe LransacLlon ls a morLgage, whlch carrled wlLh lL
a cusLomary rlghL of redempLlon. Powever, Lhe morLgagor's rlghL Lo
redeem was rendered defeaslble aL Lhe elecLlon of Lhe morLgagees by
vlrLue of ar. 3, allowlng Lhem Lhe opLlon Lo purchase Lhe sald loL. 1here
ls noLhlng lmmoral or lllegal abouL such sLlpulaLlon. lL was supporLed by
Lhe same conslderaLlon as Lhe morLgage conLracL and consLlLuLed an
lrrevocable conLlnulng offer wlLhln Lhe Llme sLlpulaLed. 1haL belng Lhe
case, 8auLlsLa spouses musL be compelled Lo honor Lhe sale.

Doctr|ne:

no rlghL Lo redeem from a [udlclal foreclosure sale, excepL Lhose
granLed by banks or banklng lnsLlLuLlons. MV0T0 () 1bT- C/. 0123
CE 6CE8E9)
1he one-year redempLlon perlod ln Lhe case of foreclosure ls
noL lnLerrupLed by Lhe flllng of an acLlon assalllng Lhe valldlLy of
Lhe morLgage, so LhaL aL Lhe explraLlon Lhereof, Lhe morLgagee
who acqulres Lhe properLy aL Lhe foreclosure sale can proceed
Lo have LlLle consolldaLed ln hls name and a wrlL of possesslon
lssued ln hls favor. M*+%=+ !"+e () 13&- D.E 0123 P87 6477C9)
C

AfLer bank has foreclosed Lhe properLy as hlghesL bldder ln Lhe
aucLlon sale, Lhe accepLed offer of spouses-borrowers Lo
repurchase" Lhe properLy was acLually a new opLlon conLracL,

1
voco v. cA, 234 SC8A 146 (1994).
!"#$! &$'($)$& *+,-./+,-01 "2234 &"3 5"6#6 !"72("86


762$! 93 &":;$##$ "77$ 8<2($&&$= *<5>"2$>? @"3 +-A +,-01
and Lhe condlLlon LhaL Lhe spouses-borrowers wlll pay monLhly
lnLeresL durlng Lhe one-year opLlon perlod ls consldered Lo be
Lhe separaLe conslderaLlon Lo hold Lhe opLlon conLracL valld.
ML%f"<;= () 1=#>$ =? 3@@A"B&- PP7 0123 CE7 6477P9)
no rlghL Lo redeem ls granLed Lo Lhe debLor-morLgagor when
Lhere has been a [udlclal foreclosure of a real esLaLe morLgage,
excepL when Lhe morLgagee ls a bank or a banklng lnsLlLuLlon.
LqulLy of 8edempLlon" " Lhe rlghL of Lhe defendanL-
morLgagor Lo exLlngulsh Lhe morLgage and reLaln ownershlp of
Lhe properLy by paylng Lhe secured debL wlLhln 90 days afLer
Lhe [udgmenL becomes flnal, or even afLer Lhe foreclosure sale
buL before Lhe conflrmaLlon of lL by Lhe CourL.

6. kedempt|on |n Iorec|osure by kura| 8anks (k.A. No. 720)
lf Lhe land ls morLgaged Lo a rural bank, morLgagor may redeem
wlLhln Lwo (2) years from Lhe daLe of foreclosure or from Lhe
reglsLraLlon of Lhe sherlff's cerLlflcaLe of sale aL such foreclosure
lf Lhe properLy ls noL covered or ls covered, respecLlvely, by
1orrens LlLle. lf Lhe morLgagor falls Lo exerclse such rlghL, he or
hls helrs may sLlll repurchase wlLhln flve (3) years from
explraLlon of Lhe Lwo (2) year redempLlon perlod pursuanL Lo
Sec. 119 of Lhe ubllc Land AcL (C.A. 141). M2#>"B !"+e =? L"("=
1%$S () 13- 4C/ 0123 ..P 6CEED9)
C


7. Lega| k|ght to kedeem under Agrar|an keform Code

kLU8LIC AC1 NC. 3844

1
nelts of lellclJoJ coopoe v. cA, 273 SC8A 741 (1997).
Sect|on 12. Lessee's k|ght of kedempt|on
In case the |andho|d|ng |s so|d to a th|rd person w|thout the
know|edge of the agr|cu|tura| |essee, the |atter sha|| have the r|ght to
redeem the same at a reasonab|e pr|ce and cons|derat|on: rov|ded,
1hat the ent|re |andho|d|ng so|d must be redeemed: rov|ded, further,
1hat where these are two or more agr|cu|tura| |essees, each sha|| be
ent|t|ed to sa|d r|ght of redempt|on on|y to the extent of the area
actua||y cu|t|vated by h|m. 1he r|ght of redempt|on under th|s Sect|on
may be exerc|sed w|th|n two years from the reg|strat|on of the sa|e,
and sha|| have pr|or|ty over any other r|ght of |ega| redempt|on.

under SecLlon 12 of 8.A. 3844, as amended, ln Lhe evenL LhaL
Lhe landholdlng ls sold Lo a Lhlrd person wlLhouL Lhe knowledge
of Lhe agrlculLural lessee, Lhe laLLer ls granLed by law Lhe rlghL Lo
redeem lL wlLhln 180 days from noLlce ln wrlLlng and aL a
reasonable prlce and conslderaLlon. Mh#%]= () 13- 4EC 0123
4PE 6CEE89)
4



2
5ptloqsoo Moooqemeot 5ystems cotp. v. cometloo, 449 SC8A 63 (2003).