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SALES

 REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  


 
CHAPTER  13:  EXTINGUISHMENT  OF   or  legal  redemption.  (1506)  
 
SALE   • Same  grounds  by  which  obligations  in  general  are  extinguished  
also  apply  to  extinguishment  of  obligations  arising  from  sale  
 
o PA-­‐LO-­‐RE-­‐CO-­‐CO-­‐NO  
I.  In  General    (Articles  1231  and  1600)  
! Payment  
 
• Only   extinguishes   obligations   to   which  
Article  1231.    
they  pertain  in  a  contract  of  sale  
Obligations  are  extinguished:    
• Not  necessarily  the  contract  itself  
 
! Loss  
(1)  By  payment  or  performance;    
! Remission  
 
! Compensation    
(2)  By  the  loss  of  the  thing  due;  
! Confusion  
 
! Novation  
(3)  By  the  condonation  or  remission  of  the  debt;  
o Annulment  
 
o Rescission  
(4)  By  the  confusion  or  merger  of  the  rights  of  creditor  and  debtor;    
o Resolutory  Condition  
 
o Prescription  
(5)  By  compensation;  
o Conventional  or  Legal  Redemption  (Article  1600)  
 
 
(6)  By  novation.  
II.  Conventional  Redemption  
 
 
Other   causes   of   extinguishment   of   obligations,   such   as   annulment,  
A.  Definition  (Article  1601)  
rescission,   fulfillment   of   a   resolutory   condition,   and   prescription,   are  
 
governed  elsewhere  in  this  Code.  (1156a)  
Article  1601.  
 
Conventional   redemption   shall   take   place   when   the   vendor   reserves  
Article  1600.    
the   right   to   repurchase   the   thing   sold,   with   the   obligation   to   comply  
Sales  are  extinguished  by  the  same  causes  as  all  other  obligations,  by  
with   the   provisions   of   article   1616   and   other   stipulations   which   may  
those   stated   in   the   preceding   articles   of   this   Title,   and   by   conventional  
have  been  agreed  upon.  (1507)  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
  ! Once   instrument   executed,   vendor   may   no  
1. Conventional  Redemption  Takes  Place:   longer  reserve  
• When  the  seller  reserved  for  himself  the  right  to  repurchase  the   o Any   right   thereafter   granted   to   the   vendor,   by   the  
thing  sold,  with  obligation  to:   vendee  cannot  be  considered  a  right  to  repurchase,  but  
a. Return  price  of  the  sale   some  other  right,  like  an  option  to  buy.  
b. Return  expenses  of  the  contract   • Essence  of  pacto  de  retro  "  title  and  ownership  is  immediately  
c. Any   other   legitimate   payments   made   by   reason   of   the   vested  in  the  vendee  a  retro,  subject  to  a  restrictive  condition  of  
sale     repurchase  by  the  vendor  within  the  redemption  period.  
d. Necessary  and  useful  expenses  of  the  thing  sold.   • Sales   with  rights  of   repurchase,   as   defined   by   the   Civil   Code,   are  
• Even   when   sale   is   one   with   right   to   repurchase,   buyer   is   not  favored.  We  will  not  construe  instruments  to  be  sales  with  a  
subrogated   to   the   seller’s   rights   and   actions   even   during   the   right   to   repurchase,   with   the   stringent   and   onerous   effects  
period  where  redemption  can  be  made  by  the  seller.   which   follow,   unless   the   terms   of   the   document   and   the  
o In   other   words,   right   to   redemption   does   not   prevent   surrounding   circumstances   require   it.   Whenever,   under   the  
full  consummation.   terms   of   the   writing,   any   other   construction   can   fairly   and  
• Who  may  exercise?   reasonably  be  made,  such  construction  will  be  adopted  and  the  
a. Seller  in  whom  right  is  recognized  by  contract   contract   will   be   construed   as   a   mere   loan   unless   the   court   can  
b. Any   person   to   whom   such   right   may   have   been   see   that,   if   enforced   according   to   its   terms,   it   is   not   an  
transferred   unconscionable  one.  Bautista   v.   Unangst,   557   SCRA   256   (2008).  
c. In   the   case   of   legal   redemption,   the   person   so   entitled   [citing  Ramos  v.  Court  of  Appeals  180  SCRA  635  (1989),  which  
by  law.   in  turn  cites  Padilla  v.  Linsangan,  19  Phil.  65  (1911)  and  Aquino  
  v.  Deala,  63  Phil.  582  (1936).    
B.  Proper  Reservation  Of  Right  To  Repurchase    
• Distinguishing  right  to  redeem  from  option  to  purchase.   1. Valid   Sale   Required   For   There   To   Be   A   Valid   Right   To  
o Article   1601:   Right   of   repurchase   must   be   reserved   by   Repurchase  
the   vendor   through   stipulation   to   that   effect   in   the   • Valid   existence   of   a   right   to   repurchase   hinges   upon   fact   that  
contract  of  sale   the  underlying  contract  of  sale  is  valid,  and  that  there  has  been  
! Not  a  right  granted  to  the  vendor  by  the  vendee   performance.  
! It  is  one  of  the  stipulations  in  the  contract  

 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
o Right   to   repurchase   must   be   constituted   as   part   of   a   family   remained   in   possession   of   the   property   for   almost   13   years.  
valid   sale   at   perfection.   xVillarica   v.   CA,   26   SCRA   189   Despite   repeated   demand,   Papio   refused   to   pay   and   refused   to   leave  
(1968).1   the  premises.  Hence,  Roberts  filed  a  complaint  for  unlawful  detainer.  
• An   agreement   to   repurchase   becomes   a   promise   to   sell   when    
made   after   the   sale   because   when   the   sale   is   made   without   Paprio   raised   the   defense   that   in   the   original   contract   of   sale,   Roberts  
such   agreement   the   purchases   acquires   the   things   sold   gave  him  the  right  to  redeem  the  property  at  any  time  for  a  reasonable  
absolutely;  and,  if  he  afterwards  grants  the  vendor  the  right  to   amount.   In   fact,   on   1985   he   remitted   to   Roberts’   authorized  
repurchase,   it   is   a   new   contract   entered   into   by   the   purchases   representative,  Perlita  Ventura,  the  amount  of  P250,000  as  repurchase  
as  absolute  owner.  Roberts  v.  Papio,  515  SCRA  346  (2007).2   price.  Allegedly,  Roberts  only  refused  to  execute  a  deed  of  absolute  sale  
  because   Ventura   misappropriated   the   amount   of   P39,000   from   the  
Roberts  v.  Papio   supposed  repurchase  price  
   
Facts:  Spouses   Martin   and   Lucina   Papio   were   owners   of   a   residential   lot   Issue:   Whether   or   not   the   contract   of   sale   entered   into   by   Papio   and  
located   in   Makati.   They   executed   a   real   estate   mortgage   on   said   Roberts  is  actually  an  equitable  mortgage.  
property   to   obtain   a   long   from   Amparo   Investments.   Upon   Papio’s    
failure  to  pay  the  loan,  the  corporation  filed  a  petition  for  extrajudicial   Held:  NO.  It  is  the  contract  of  sale.  One  repurchases  only  what  one  has  
foreclosure  of  mortgage.  Since  the  couple  needed  money  to  prevent  the   previously  sold.  The  right  to  repurchase  presupposes  a  valid  contract  of  
foreclosure,   they   executed   a   Deed   of   Absolute   Sale   over   the   property   in   sale   between   same   parties.   By   insisting   that   he   had   repurchased   the  
favor   of   Amelia   Roberts.   Of   the   P85,000   purchase   price,   P59,000   was   property,   Papio   thereby   admitted   that   the   deed   of   absolute   sale  
paid  to  Amparo  Investments  while  the  P26,000  difference  was  retained   executed  by  him  and  Roberts  was  in  fact  and  in  law  a  deed  of  absolute  
by   the   spouses.   The   title   to   the   property   was   delivered   to   Amelia   sale   and   not   an   equitable   mortgage;   he   had   acquired   ownership   over  
Roberts.   the   property   based   on   said   deed.   Respondent,   is   thus   estopped   from  
  asserting   that   the   contract   under   the   deed   of   absolute   sale   is   an  
Thereafter,   the   parties   executed   a   2-­‐year   contract   of   lease   over   the   equitable   mortgage   unless   there   is   an   allegation   and   evidence   of  
property,  with  Roberts  as  lessor  and  Papio  as  lessee.  At  first,  Papio  paid   palpable   mistake   on   the   part   of   respondent,   or   a   fraud   on   the   part   of  
his  monthly  rentals,  but  stopped  paying  after  1985.  However,  he  and  his   Roberts.  
 
1
 Claravall   v.   CA,   190   SCRA   439   (1990);   Torres   v.   CA,   216   SCRA   287   (1992);   Doctrine:  
Roberts  v.  Papio,  515  SCRA  346  (2007).    
2  
 Ramos  v.  Icasiano,  51  Phil  (1927).  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
• In   sales   denominated   as   pacto   de   retro,   the   price   agreed   upon    
should  not  generally  be  considered  as  the  just  value  of  the  thing   D.  Distinguished  From  Option  To  Purchase  
sold,   absent   other   corroborative   evidence—there   is   no    
requirement  in  sales  that  the  price  be  equal  to  the  exact  value   Right  to  Redeem   Option  to  Purchase  
of  the  thing  subject  matter  of  the  sale.  xDorado  Vda.  De  Delfin   Not  a  separate  contract  –  merely   Generally  a  principal  contract,  
v.  Dellota,  542  SCRA  397  (2008).   part  of  a  main  contract  of  sale  –   created  independent  of  another  
  cannot  exist  unless  reserved  at   contract  
C.  Right  Of  Repurchase  Provable  By  Parol  Evidence   time  of  perfection  
• Right  to  repurchase:  merely  a  feature  in  the  contract  of  sale   Must  be  imbedded  into  the   May  exist  before  or  after  the  
o Thus,  it  is  governed  by  the  Statute  of  Frauds   contract  of  sale  upon  its  perfection   perfection  of  the  sale,  or  be  
o However,   SC   has   held:   when   the   contract   of   sale   is   in   imbedded  in  another  contract  
writing,   parol   evidence   may   be   adduced   to   prove   the   upon  its  perfection  
right  to  repurchase   Does  not  need  a  separate   Must  have  consideration  separate  
! This  is  because  the  Deed  of  Sale  and  the  verbal   consideration  to  be  valid  and   and  distinct  from  the  purchase  
agreement  allowing  the  right  to  repurchase  are   effective   price  
an  integral  whole.   Redemption  period  cannot  exceed   Period  for  an  option  may  exceed  
! The   deed   of   sale   itself   is   the   “note   or   10  years   10  years  
memorandum”  required  to  remove  the  contract   Exercise  requires  that  notice  be   Requires  only  a  notice  of  exercise  
from  the  Statute  of  Frauds.   accompanied  by  tender  of   to  be  given  to  the  optioner  
o Also,   if   there   is   no   objection   to   such   parol   evidence,   it   payment  –  consignment  when  
will  be  admissible  in  trial.   tender  cannot  be  made  
• SC:  “Best  Evidence”  Rule  not  an  obstacle  to  the  adducement  of   Exercise  extinguishes  contract  of   Results  in  perfection  of  a  contract  
such  parol  evidence.   sale   of  sale  
o When   parol   agreement   was   the   moving   cause   of   the    
written  contract.   E.  Redemption  Period  
o When   written   contract   was   executed   on   the   • The   period   to   repurchase   is   not   suspended   merely   because  
faith/representation  of  the  parol  contract.   there   is   a   divergence   of   opinion   between   the   parties   as   to   the  
o Right   to   repurchase   proved   orally   is   consistent   with   precise  meaning  of  the  phrase  providing  for  the  condition  upon  
terms  of  written  contract.   which   the   right   to   repurchase   is   triggered.   The   existence   of  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
seller  a  retro’s  right  to  repurchase  the  proper  is  not  dependent   1. When  No  Period  Agreed  Upon  
upon   the   prior   final   interpretation   by   the   court   of   the   said   • General   Rule:   If  it  is  stipulated  that  there  is  a  right  to  redeem,  
phrase.   Misterio   v.   Cebu   State   College   of   Science   and   and  in  the  absence  of  agreement  as  to  period  of  exercise,  it  shall  
Technology,  461  SCRA  122  (2005).   last  4  years  from  date  of  the  contract.  
  • Misterio  v.  Cebu  State  College,  461  SCRA  122  (2005)  
Misterio  v.  Cebu  State  College  of  Science  and  Technology   o It   was   held   that   the   four-­‐year   period   began   from  
  happening  of  condition  contained  in  deed  of  sale  (rather  
Facts:   Asuncion  sold  to  Sudlon  Agricultural  High  School  (SAHS)  a  parcel   than  date  of  contract).  
of  land,  reserving  the  right  to  repurchase  the  same  in  case  (1)  the  school   o CLV:  This  is  inexplicable!  (To  be  discussed  later)  
ceases   to   exist,   or   (2)   the   school   transfers   location.   She   had   her   right    
annotated.   She   died.   By   virtue   of   BP   412,   SAHS   was   merged   with   the   2. When  Period  Agreed  Upon  
Cebu  State  College,  effective  June  1983.  In  1990,  the  heirs  of  Asuncion   • General   Rule:   If   there   is   an   agreement   as   to   period,   it   cannot  
sought  to  exercise  their  right  to  redeem,  claiming  that  school  has  ceased   exceed   10   years   if   it   exceeds   10   years,   the   agreement   is   only  
to  exist.   valid  for  the  first  10  years.    
  • Anchuel  v.  Intermediate  Appellate  Court,  147  SCRA  434  (1987)  
Issue:  Whether  or  not  the  heirs  of  Asuncion  may  still  exercise  their  right   o Stipulation:  Vendor  cannot  redeem  within  19  years  from  
to  redeem  the  property   execution.  
  o SC:  Such  is  void  for  being  violative  of  Article   1601,   and  
Held:  NO.   Their   right   has   already   prescribed.   Considering   that   no   period   fixed  the  period  of  redemption  at  ten  years.  
for   redemption   was   agreed   upon,   the   law   imposes   a   4-­‐year   limitation.   • Tayao  v.  Dulay,  13  SCRA  758  (1965)  
This   means   that   from   the   time   the   school   was   merged   to   Cebu   State   o Stipulation:   right   of   redemption   cannot   be   exercised  
College,   they   had   4   years,   or   until   June   1987   to   redeem   the   property.   within  10  years  
However,   they   failed   to   do   so   within   the   period.   Failure   to   redeem   o SC:   Stipulation   was   void.   However,   such   nullity   does   not  
automatically   consolidates   ownership   in   favor   of   the   vendee.   The   fact   convert   contract   into   a   mere   indebtedness   nor   an  
that   the   right   to   redeem   was   annotated   does   not   make   it   equitable  mortgage.  
imprescriptible,  it  only  serves  to  notify  third  persons.   ! Article  1606  would  apply  "  seller  may  exercise  
  right  to  redemption  within  a  period  of  10  years  
Doctrine:   form  date  of  contract  
 

 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
o Although  stipulation  as  to  the  period  may  be  unclear  or   o Note:   The   successors-­‐in-­‐interest   of   the   seller   a   retro  
void,  there  is  still  a  stipulation.   sought   to   exercise   the   redemption   right   after   the  
! Thus,   we   follow   the   10-­‐year   period   for   expiration  of  the  four-­‐year  redemption  period.  
redemption.   • CLV:  No  contradiction  between  these  two  cases  
! We   do   not   consider   the   right   of   redemption   as   o Important   consideration:   “vesting”   of   the   exercise   of  
being  one  without  a  stipulated  period.     the   right   by   its   proper   exercise   (requiring   notice   and  
• Bandong  v.  Austria,  31  Phil.  479  (1915)   tender)  
o Stipulation:  sellers  could  exercise  in  March  of  any  year.   o Thus,   in   essence,   completion   of   redemption   process  
o Such   could   be   exercised   for   a   period   of   10   years   from   (payment  of  amounts  required  in  Article  1616)  is  tolled  
date  thereafter,  but  not  after  10  years     by   the   filing   of   a   civil   action   relating   to   the   issue   of   such  
• Ochagabia  v.  Court  of  Appeals,  304  SCRA  867  (1999)   redemption  
o Right   to   redeem   had   prescribes   when   exercised   after   10   ! Provided  that  both  exercise  and  filing  would  be  
years.   done  within  redemption  period  
   
3. Pendency  of  Action  Tolls  Redemption  Period   4. Non-­‐payment   of   Price   Does   Not   Affect   Running   of   Redemption  
• Ong  Chua  v.  Carr,  53  Phil.  957  (1929)   "   pendency   of   an   action   Period  
brought  in  good  faith  and  relating  to  the  validity  of  a  sale  a  retro   • Catangcatang  v.  Legayada,  82  SCRA  51  (1978)  "   nonpayment  
tolls  the  running  of  the  period  of  redemption.   of   purchase   price   does   not   serve   to   suspend   the   period   of  
o Note:  The  seller  a  retro  had  given  notice  of  the  exercise   redemption.  
of  the  redemption  right  within  the  redemption  period.   o Sale   was   consummated   upon   execution   of   document,  
BUT   and  delivery  of  land  to  the  vendee.  
• Misterio   v.   Cebu   State   College,   461   SCRA   122   (2005)   "   o Nonpayment   of   the   balance   of   the   price   does   not  
Pendency  of  a  litigation  does  not  toll  the  period.   suspend   the   efficacy   of   the   provisions   of   the   valid  
o Such  period  is  not  suspended  merely  because  there  is  a   contract.  
divergence   of   opinion   between   the   parties   as   to   when    
the   condition   upon   which   the   right   to   repurchase   is   F.  Situation  Prior  to  Redemption  
triggered.   • In  a  sale  a  retro,  buyer  has  a  right  to  the  immediate  possession  
o Existence  of  right  to  repurchase  is  not  dependent  upon   of   the   property   sold,   unless   otherwise   agreed   upon,   since   title  
the  interpretation  by  the  court  of  said  condition   and   ownership   of   the   property   sold   are   immediately   vested   in  

 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
the   buyer   a   retro,   subject   only   to   the   resolutory   condition   of   the  part  which  he  may  have  acquired.  (1514)  
repurchase   by   the   seller   a   retro   within   the   stipulated   period.      
xVda.  de  Rigonan  v.  Derecho,    463  SCRA  627  (2005).1   Article  1613.  
• Pending   repurchase,   the   buyer   may   alienate,   mortgage,   or   In   the   case   of   the   preceding   article,   the   vendee   may   demand   of   all   the  
encumber  the  property.   vendors   or   co-­‐heirs   that   they   come   to   an   agreement   upon   the  
o But   such   alienation,   mortgage   or   encumbrance   is   as   repurchase  of  the  whole  thing  sold;  and  should  they  fail  to  do  so,  the  
revocable  as  his  right.   vendee   cannot   be   compelled   to   consent   to   a   partial   redemption.  
o When   right   exercised,   the   buyer   has   to   return   the   (1515)  
property  free  from  all  encumbrances  imposed  by  him.    
  Article  1614.  
G.    Who  Can  Redeem    (Articles  1611  to  1614)   Each  one  of  the  co-­‐owners  of  an  undivided  immovable  who  may  have  
  sold   his   share   separately,   may   independently   exercise   the   right   of  
Article  1611.   repurchase   as   regards   his   own   share,   and   the   vendee   cannot   compel  
In   a   sale   with   a   right   to   repurchase,   the   vendee   of   a   part   of   an   him  to  redeem  the  whole  property.  (1516)  
undivided   immovable   who   acquires   the   whole   thereof   in   the   case   of    
article  498,  may  compel  the  vendor  to  redeem  the  whole  property,  if   • Article   1611   "   Seller   wants   to   repurchase   only   his   part:   Buyer  
the  latter  wishes  to  make  use  of  the  right  of  redemption.  (1513)   may  compel  him  to  repurchase  the  whole  thing.  
  • Article   1614   "   Creditors   of   the   seller   cannot   make   use   of   the  
Article  1612.   right   of   redemption   against   the   buyer,   until   after   they   have  
If   several   persons,   jointly   and   in   the   same   contract,   should   sell   an   exhausted  the  property  of  the  seller.  
undivided   immovable   with   a   right   of   repurchase,   none   of   them   may   • De  Guzman  v.  Court  of  Appeals,  148  SCRA  74  (1987)  
exercise  this  right  for  more  than  his  respective  share.   o If   one   of   the   co-­‐owners/co-­‐heirs   alone   redeem   the  
  whole  property,  he  will  be  a  mere  trustee  with  respect  
The  same  rule  shall  apply  if  the  person  who  sold  an  immovable  alone   to  the  shares  of  the  co-­‐owners/co-­‐  heirs.  
has  left  several  heirs,  in  which  case  each  of  the  latter  may  only  redeem   o Thus,  no  prescription  lies  against  the  rights  of  these  co-­‐
owners/co-­‐heirs   to   demand   from   the   redemptioner  
1
 Reyes  v.  Hamada,  14  SCRA  215  (1965);  Solid  Homes,  Inc.  v.  CA,  275  SCRA  267   their  share  in  the  property  
(1997);  Misterio  v.  Cebu  State  College  of  Science  and  Technology,  461  SCRA  122    
(2005);   Cadungog   v.   Yap,   469   SCRA   561   (2005);   Ramos   v.   Dizon,   498   SCRA   17  
(2006);  Lumayag  v.  Heirs  of  Jacinto  Nemeño,  526  SCRA  51  (2007).     H.    How  Redemption  Effected    (Article  1616)  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
  • Well-­‐settled   is   the   rule   that   a   formal   offer   to   redeem   must   be  
Article  1616.   accompanied  by  a  valid  tender  of  the  redemption  price  and  the  
The   vendor   cannot   avail   himself   of   the   right   of   repurchase   without   filing   of   a   judicial   action,   plus   the   consignation   of   the  
returning  to  the  vendee  the  price  of  the  sale,  and  in  addition:   redemption  price  within  the  period  of  redemption,  is  equivalent  
  to  a  formal  offer  to  redeem.  xVillegas  v.  Court  of  Appeals,  499  
(1)   The   expenses   of   the   contract,   and   any   other   legitimate   payments   SCRA  276  (2006).    
made  by  reason  of  the  sale;   o In  order  to  exercise  the  right  to  redeem,  only  tender  of  
  payment   is   sufficient   xLegaspi   v.   CA,   142   SCRA   82  
(2)  The  necessary  and  useful  expenses  made  on  the  thing  sold.  (1518)   (1986);   consignation   is   not   required   after   tender   is  
  refused  xMariano  v.  CA,  222  SCRA  736  (1993).  
• Three  things  need  to  be  returned  (Article  1616)   o The  fact  that  the  seller  a  retro  deposited  the  amount  of  
1. Price  of  the  sale.   the   repurchase   money   with   the   Clerk   of   Court   was  
2. Expenses   of   contract,   and   any   other   legitimate   simply  an  additional  security.  
payments  made  by  reason  of  the  sale.   o Mere  sending  of  letters  expressing  desire  to  repurchase,  
3. Necessary  and  useful  expenses  made  on  the  thing  sold.   without  tender,  does  not  comply  with  the  requirement  
• Seller  may  bring  his  action  against  every  possessor  who  derives   of  law.  
right  from  the  buyer.   • But   when   tender   not   possible,   consignation   should   be   made  
o Even   if   there   is   no   mention   of   the   right   to   repurchase   in   xCatangcatang  v.  Legayada,  84  SCRA  51  (1978).  
the  contract  between  buyer  and  subsequent  buyer.   • A  formal  offer  to  redeem,  accompanied  by  a  bona  fide  tender  of  
o Without  prejudice  to  provisions  of  Property  Registration   redemption  price,  is  not  essential  where  the  right  to  redeem  is  
Decree   and   the   Mortgage   Law,   with   respect   to   exercised  through  a  judicial  action  within  the  redemption  period  
mortgagees/purchasers  in  good  faith  and  for  value.   and  simultaneously  depositing  the  redemption  price.  xLee  Chuy  
• Failure   to   pay   useful   improvements   entitles   buyer   a   retro   to   Realty  Corp.  v.  CA,  250  SCRA  596  (1995).  
retain   possession   of   the   land   until   actual   reimbursement   is   o No  prescribed  form  for  an  offer  to  redeem    
done.   o Thus,  we  have  two  ways  of  redeeming  
• Article  1616  is  not  exclusive   ! Formal   offer   to   pay   accompanied   by   bona   fide  
o It   should   be   construed   with   Article   1601   which   states   tender  of  payment.  
that  in  order  to  redeem,  Article  1616  must  be  complied  
with  as  well  as  “other  stipulations  agreed  upon.”  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
Only   necessary   to   preserve   right   of  
• prorating  of  those  existing  at  the  time  of  redemption,  if  no  indemnity  
redemption   for   further   enforcement.   was  paid  by  the  purchaser  when  the  sale  was  executed.  
(as  opposed  to  exercised).      
! Exercise   through   judicial   action   accompanied   Should  there  have  been  no  fruits  at  the  time  of  the  sale  and  some  exist  
with   simultaneous   deposit   of   the   redemption   at   the   time   of   redemption,   they   shall   be   prorated   between   the  
price.   redemptioner  and  the  vendee,  giving  the  latter  the  part  corresponding  
• Filing   of   action   is   equivalent   to   formal   to   the   time   he   possessed   the   land   in   the   last   year,   counted   from   the  
offer.   anniversary  of  the  date  of  the  sale.  (1519a)  
o When  is  right  of  redemption  deemed  “vested”    
! Formal   offer   to   redeem,   accompanied   by   bona   • Article   1617   on   the   disposition   of   fruits   of   property   redeemed  
fide   tender   of   payment,   within   redemption   applies   only   when   the   parties   failed   to   provide   a   sharing  
period.   arrangement   thereof;   otherwise,   the   parties   contractual  
! Thus,  the  right  is  “vested”  –  it  may  be  enforced   stipulations  prevail.  xAlmeda  v.  Daluro,  79  SCRA  327  (1977).  
even  beyond  redemption  period   • Article   448   of   the   Civil   Code   on   the   rights   of   a   builder   in   good  
  faith  is  inapplicable  in  cases  involving  contracts  of  sale  with  right  
I.  Redemption  Price    (Article  1616)   of  repurchase—it  is  inapplicable  when  the  owner  of  the  land  is  
• A   stipulation   in   a   sale   a   retro   requiring   as   part   of   the   the  builder,  sower,  or  planter.  Where  the  true  owner  himself  is  
redemption   price   interest   for   the   cost   of   money,   is   not   in   the  builder  of  the  works  on  his  own  land,  the  issue  of  good  faith  
contravention   with   Article   1616,   since   the   provision   is   not   or   bad   faith   is   entirely   irrelevant.   The   right   to   repurchase   may  
restrictive   nor   exclusive,   and   does   not   bar   additional   amounts   be  exercised  only  by  the  vendor  in  whom  the  right  is  recognized  
that   the   parties   may   agree   upon,   since   the   article   itself   provides   by  contract  or  by  any  person  to  whom  the  right  may  have  been  
“and   other   stipulations   which   may   have   been   agreed   upon.”   transferred.   In   a   sale   with   right   of   repurchase,   the   applicable  
xSolid  Homes  v.  Court  of  Appeals,  275  SCRA  267  (1997).     provisions  are  Articles  1606  and  1616  of  the  Civil  Code,  and  not  
  Article  448.  Narvaez  v.  Alciso,  594  SCRA  60  (2009).  
J.  Fruits    (Article  1617)    
  K.  Effect  When  No  Redemption  Made:  Consolidation    (Article  1607)  
Article  1617.    
If   at   the   time   of   the   execution   of   the   sale   there   should   be   on   the   land,   Article  1607.  
visible   or   growing   fruits,   there   shall   be   no   reimbursement   for   or   In  case  of  real  property,  the  consolidation  of  ownership  in  the  vendee  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
by  virtue  of  the  failure  of  the  vendor  to  comply  with  the  provisions  of   exercise  the  redemption  right  within  the  period  agreed  upon  or  
article  1616  shall  not  be  recorded  in  the  Registry  of  Property  without  a   provided  for  by  law,  vests  upon  the  buyer  a  retro  absolute  title  
judicial  order,  after  the  vendor  has  been  duly  heard.  (n)   and   ownership   over   the   property   sold   by   operation   of   law.  
  Consequently,  after  the  effect  of  consolidation,  the  mortgage  or  
• Before   the   New   Civil   Code:   when   no   redemption   made,   buyer   re-­‐sale   by   the   seller   a   retro   of   the   same   property   would   not  
automatically  acquired  full  ownership.  Today,  Article  1607.   transfer   title   and   ownership  to  the  mortgagee  or  buyer,  as  the  
o This   proceeding   for   consolidation   is   an   ordinary   civil   case   may   be,   under   the   Latin   maxim   NEMO   DAT   QUOD   NON  
action,  not  a  motion  incident  to  another  action.   HABET.  xCadungog  v.  Yap,  469  SCRA  561  (2005).  
o If   such   is   denied   because   contract   was   actually   an   o Notwithstanding   Article   1607,   recording   in   the   Registry  
equitable  mortgage,  then  another  action  may  be  filed  to   of  Deeds  of  the  consolidation  of  ownership  to  the  buyer  
collect/foreclose   is  not  a  condition  sine  qua  non  to  transfer  of  ownership  
• Article  1607  abolished  automatic  consolidation  of  ownership  in   ! Buyer  would  still  be  the  owner.  
the  vendee  a  retro  upon  expiration  of  the  redemption  period  by   ! Essence  of  pacto  de  retro  "  title  and  ownership  
requiring   the   vendee   to   institute   an   action   for   consolidation   are   immediately   vested   in   buyer,   subject   to  
where   the   vendor   a   retro   may   be   duly   heard.   If   the   vendee   resolutory  condition  of  repurchase.  
succeeds  in  proving  that  the  transaction  was  indeed  a  pacto  de   ! Failure   of   seller   to   perform   the   said   condition  
retro,   the   vendor   is   still   given   a   period   of   thirty   days   from   the   vests   absolute   title   and   ownership   over   the  
finality   of   the   judgment   within   which   to   repurchase   the   property  sold.  
property.   xSolid   Homes   v.   Court   of   Appeals,   275   SCRA   267   ! Failure   to   consolidate   title   under   Article   1607  
(1997).   does  not  impair  buyer’s  ownership.  The  method  
• Once   the   vendor   fails   to   redeem   the   property   within   the   prescribed   is   merely   for   purposes   of  
stipulated   period,   irrevocable   title   shall   be   vested   in   the   vendee   registration.  
by   operation   of   law.   xVda.   de   Rigonan   v.   Derecho,   463   SCRA    
627  (2005).   L.  Equitable  Mortgage    (Articles  1602-­‐1604)  
• Under  a  sale  a  retro,  the  failure  of  the  buyer  to  consolidate  his    
title   under   Article   1607   does   not   impair   such   title   and   Article  1602.    
ownership  because  the  method  prescribed  thereunder  is  merely   The   contract   shall   be   presumed   to   be   an   equitable   mortgage,   in   any   of  
for   the   purpose   of   registering   and   consolidating   titles   to   the   the  following  cases:  
property.   In   fact,   the   failure   on   the   part   of   a   seller   a   retro   to    

 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
(1)   When   the   price   of   a   sale   with   right   to   repurchase   is   unusually    
inadequate;   1. Definition  
  • An   equitable   mortgage   is   “one   which   although   lacking   in   some  
(2)  When  the  vendor  remains  in  possession  as  lessee  or  otherwise;   formality,  or  form  or  words,  or  other  requisites  demanded  by  a  
  statute,   nevertheless   reveals   the   intention   of   the   parties   to  
(3)   When   upon   or   after   the   expiration   of   the   right   to   repurchase   charge  real  property  as  security  for  a  debt,  and  contains  nothing  
another  instrument  extending  the  period  of  redemption  or  granting  a   impossible   or   contrary   to   law.”   Raymundo   v.   Bandong,   526  
new  period  is  executed;   SCRA  514  (2007)  1  
  • Essential  requisites  of  equitable  mortgage:  xMolina   v.   Court   of  
(4)   When   the   purchaser   retains   for   himself   a   part   of   the   purchase   Appeals,  398  SCRA  97  (2003).2  
price;     a. Parties   entered   into   a   contract   denominated   as   a  
  contract  of  sale;  and    
(5)  When  the  vendor  binds  himself  to  pay  the  taxes  on  the  thing  sold;   b. The  intention  was  to  secure  an  existing  debt  by  way  of  a  
  mortgage.  
(6)   In   any   other   case   where   it   may   be   fairly   inferred   that   the   real   • San  Pedro  v.  Lee,  430  SCRA  338  (2005)   "   when   the   two   above  
intention   of   the   parties   is   that   the   transaction   shall   secure   the   conditions   are   not   proven,   the   existence   of   any   circumstance  
payment  of  a  debt  or  the  performance  of  any  other  obligation.  
 
1
In   any   of   the   foregoing   cases,   any   money,   fruits,   or   other   benefit   to   be    Ceballos   v.   Intestate   Estate   of   the   Late   Emigdio   Mercado,   430   SCRA   323  
(2004);   Alvaro   v.   Ternida,   479   SCRA   288   (2006);   Cirelos   v.   Hernandez,   490   SCRA  
received   by   the   vendee   as   rent   or   otherwise   shall   be   considered   as  
624  (2006);  Lumayag  v.  Heirs  of  Jacinto  Nemeño,  526  SCRA  51  (2007);  Olivares  
interest  which  shall  be  subject  to  the  usury  laws.  (n)   v.   Sarmiento,   554   SCRA   384   (2008);   Tio   v.   Abayata,   556   SCRA   175   (2008);  
  Deheza-­‐Inamarga   v.   Alano,   574   SCRA   651   (2008);   Rockville   Excel   International  
Exim  Corp.  v.  Culla,  602  SCRA  124  (2009);  Kings  Properties  Corp.  v.  Galido,  606  
Article  1603.  
SCRA  137  (2009).  
In   case   of   doubt,   a   contract   purporting   to   be   a   sale   with   right   to   2
 Matanguihan   v.   CA,   275   SCRA     380   (1997);   Martinez   v.   CA,   358   SCRA   38  
repurchase  shall  be  construed  as  an  equitable  mortgage.  (n)   (2001);   Hilado   v.   Heirs   of   Rafael   Medlla,   37   SCRA   257   (2002);   Ceballos   v.  
Intestate  Estate  of  the  Late  Emigdio  Mercado,  430  SCRA  323  (2004);  San  Pedro  
 
v.   Lee,   430   SCRA   338   (2005);   Go   v.   Bacaron,   472   SCRA   229   (2005),   citing  
Article  1604.   VILLANUEVA,  CESAR  L.  PHILIPPINE   LAW  ON  SALES,  (1998  ed.),  p.  271;  Romulo  v.  Layug,  
The  provisions  of  article  1602  shall  also  apply  to  a  contract  purporting   Jr.,  501  SCRA262  (2006);  Roberts  v.  Papio,  515  SCRA  346  (2007);  Raymundo  v.  
Bandong,  526  SCRA  514  (2007);  Dorado  Vda.  De  Delfin  v.  Dellota,  542  SCRA  397  
to  be  an  absolute  sale.  (n)  
(2008);  Muñoz,  Jr.  V.  Ramirez,  629  SCRA  38  (2010).  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
enumerated   in   Article   1602   cannot   be   the   basis   to   treat   the   competent.   Dorado   Vda.   De   Delfin   v.   Dellota,   542   SCRA   397  
transaction  as  an  equitable  mortgage.   (2008).  
• General  Rule:  In  other  words,  we  look  at  the  two  requisites  first    
before  going  to  Article  1602.   2. Rationale  Behind  Provisions  On  Equitable  Mortgage  
• The   decisive   factor   in   evaluating   whether   an   agreement   is   an   • The   provisions   of   the   Civil   Code   governing   equitable   mortgage  
equitable   mortgage   is   the   intention   of   the   parties,   as   shown   not   disguised  as  sale  contracts  are  primarily  designed  to  curtail  the  
necessarily   by   the   terminology   used   in   the   contract   but   by   all   evils   brought   about   by   contracts   of   sale   with   right   to  
the  surrounding  circumstances,  such  as  the  relative  situation  of   repurchase,  particularly  the  circumvention  of  the  usury  law  and  
the  parties  at  that  time,  the  attitude,  acts,  conduct,  declarations   pactum   commissorium.   Heirs   of   Jose   Reyes,   Jr.   v.   Reyes,   626  
of   the   parties,   the   negotiations   between   them   leading   to   the   SCRA  758  (2010).  
deed,  and  generally,  all  pertinent  facts  having  a  tendency  to  fix   o They   envision   contracts   of   sale   w/   right   to   repurchase  
and   determine   the   real   nature   of   their   design   and   where   the   real   intention   of   the   parties   is   that   the  
understanding.  Necessitous  men  are  not  always  free,  in  that  to   repurchase   price   is   money   loaned,   and   the   “pacto   de  
answer  a  pressing  emergency,  they  will  submit  to  any  term  that   retro  sale”  is  a  means  of  securing  the  loan.  
the  crafty  may  impose  on  them.  Banga   v.   Bello,   471   SCRA   653   o Since   Article   1602   is   remedial   in   nature,   it   was   applied  
 1
(2005)   retroactively  in  cases  prior  to  the  effectivity  of  the  New  
• This   kind   of   arrangement,   where   the   ownership   of   the   land   is   Civil  Code.  
supposedly   transferred   to   the   buyer   who   provides   for   the   funds    
to   redeem   the   property   from   the   bank   but   nonetheless   allows   3. When   In   Doubt,   Construe   As   Equitable   Mortgage   And   Not  
the   seller   to   later   on   buy   back   the   properties,   is   in   the   nature   of   Right  To  Repurchase    
an   equitable   mortgage   governed   by   Articles   1602   and   1604   of   • When   in   doubt,   courts   construe   transactions   as   equitable  
the   Civil   Code.   Bacungan   v.   Court   of   Appeals,   574   SCRA   642   mortgages  since  it  provides  for  lesser  transmission  of  rights.  
(2008).   o The   law   on   equitable   mortgage   favors   the   least  
• If  the  terms  of  the  pacto  de  retro  sale  were  unfavorable  to  the   transmission   of   rights   and   interest   over   a   property   in  
vendor,   courts   have   no   business   extricating   her   from   that   bad   controversy,   since   the   law   seeks   to   prevent  
bargain—courts   are   not   guardians   of   persons   who   are   legally   circumvention   of   the   law   on   usury   and   the   prohibition  
against   pactum   commissorium   provisions.   Additionally,  
1
it   is   aimed   to   end   unjust   or   oppressive   transactions   or  
 Austria   v.   Gonzales,   Jr.,   420   SCRA   414   (2004);   Raymundo   v.   Bandong,   526  
violations   in   connection   with   a   sale   or   property.   The  
SCRA  514  (2007).    
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
wisdom   of   these   provisions   cannot   be   doubted,   • General   Rule:   Existence  of  any  one  of  these  conditions  suffices  
considering   many   cases   of   unlettered   persons   or   even   to  give  rise  to  the  non-­‐conclusive  presumption  that  the  contract  
those   with   average   intelligence   invariably   finding   is  an  equitable  mortgage.  
themselves   in   no   position   whatsoever   to   bargain   fairly   • Exception:   Article   1602   is   not   conclusive   and   may   be   rebutted  
with   their   creditors.   xSpouses   Miseña   v.   Rongavilla,   by  competent  and  satisfactory  proof  to  the  contrary.  
303  SCRA  749  (1999).1   • Lim   v.   Calaguas   (45   O.G.   No.   8,   p.3394)   "   in   order   for  
• Lapat   v.   Rosario,   312   SCRA   539   (1999)   "   contract   should   be   presumption   to   apply,   the   parties   must   have   intended   the  
considered  as  a  mortgage  or  as  a  loan  instead  of  pacto  de  retro   contract  to  be  a  mortgage  and  not  a  pacto  de  retro.  
when   its   terms   are   ambiguous   or   the   circumstances   are   • Lim   enumerates   the   following   circumstances   to   treat   the  
inconsistent  with  a  sale.   contract  as  an  equitable  mortgage.  
• Molina  v.  Court  of  Appeals,  398  SCRA  97  (2003)  "  intention  of   o Terms   used   in   power-­‐of-­‐attorney   indicate   that  
parties   is   showed   by   all   surrounding   circumstances,   not   by   the   conveyance   was   intended   to   be   a   loan   secured   by   a  
terminology  used  in  the  contract.   mortgage  
• Equitable   mortgage   seeks   to   prevent   situation   where   o Price   paid   in   relation   to   value   of   property   is   grossly  
necessitous   men,   who   are   not   always   free   in   that   to   answer   a   inadequate  
pressing  emergency,  will  submit  to  any  term  that  the  crafty  may   ! However,   mere   allegation   of   insufficiency   of  
impose  on  them.  Banga  v.  Bello,  471  SCRA  653  (2005)   selling  price  does  not  create  the  presumption  if  
o Besides,  it  is  a  fact  that  in  time  of  grave  financial  distress   there  is  no  proof  regarding  the  market  values  of  
which   render   persons   hard-­‐pressed   to   meet   even   their   the  area  and  property  in  question  
basic   needs   or   answer   an   emergency,   such   persons   • Inadequacy   of   price:   Consideration   so  
would   have   no   choice   but   to   sign   a   deed   of   absolute   far   short   of   the   real   value   as   to   startle  
sale  of  property  or  a  sale  thereof  with  pacto  de  retro  if   the  mind.  
only   to   obtain   a   much-­‐needed   loan   from   unscrupulous   • Even  with  the  assertion  that  the  price  in  
money  lenders.  xMatanguihan   v.   Court   of   Appeals,   275   a   pacto   de   retro   is   not   the   assessed  
SCRA  380  (1997).2   price,   does   not   justify   the   conclusion  
  that   the   contract   is   one   of   equitable  
4. When  Presumed  Equitable  Mortgage  (Article  1602)   mortgage.  
1 o Practice   in   pacto   de   retro   sale   is  
 Lao  v.  Court  of  Appeals,  275  SCRA  237  (1997).    
2
 Salonga  v.  Concepcion,  470  SCRA  291  (2005).     to   fix   a   relatively   reduced   price  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
to  afford  the  seller  a  retro  every   outstanding   mortgage   obligations.   –   Equitable  
facility  to  redeem  the  property.   Mortgage  
o Seller   at   time   of   alleged   sale   was   in   urgent   need   of   ! Alleged   loan   disbursed   on   installments   –   no  
money.   proof   as   to   inadequacy   of   price   –   continued  
o Supposed  seller  invested  money  he  obtained  in  making   receipt   of   rentals   by   seller   was   found   to   be   a  
improvements  on  the  property  sold.   gesture   of   generosity   :   considered   sale   on  
o Seller  remained  in  possession.   installments  
! Although  the  seller  only  remained  in  possession   o There  was  a  previous  debt  between  the  parties  that  was  
for  a  year,  such  stipulation  did  not  detract  from   not  extinguished  by  the  sale  but  remained  subsisting.  
the   fact   that   possession   (an   indicium   of   • Delay  in  transferring  title  does  not  give  rise  to  presumption.  
ownership)   was   retained   by   the   vendor,   and    
that   the   vendor   retained   part   of   the   purchase   5. Badges  of  Equitable  Mortgage  (Article  16021)  
price.   • A  contract  of  sale  actually  intended  to  secure  the  payment  of  an  
! This  pointed  to  an  equitable  mortgage.   obligation   is   presumed   an   equitable   mortgage.   xRomulo   v.  
! Continued  possession  where  sellers  promised  to   Layug,  Jr.,  501  SCRA  262  (2006).2  
vacate,  but  did  not.  Tolerated  possession  is  not   • The  presence  of  only  one  circumstance  defined  in  Article  1602  is  
enough  to  prove  equitable  mortgage.   sufficient   for   a   contract   of   sale   a   retro   to   be   presumed   an  
o Seller  paid  land  tax   equitable  mortgage.  xHilado  v.  Medalla  377  SCRA  257  (2002).3    
o Buyer   accepted   partial   payments,   such   acceptance   • The  presumption  in  Article  1602  jibes  with  the  rule  that  the  law  
being  incompatible  with  idea  of  irrevocability  of  the  title   favors  the  least  transmission  of  property  rights.  xEnriquez,  Sr.  v.  
of   ownership   of   the   purchaser   at   the   expiration   of   the  
1
term  stipulated  in  the  original  contract  for  the  exercise    Lim  v.  Calaguas,  45  O.G.  No.  8,  p.  3394  (1948);  Balatero  v.  IAC,  154  SCRA  530  
(1987);  Mariano  v.  CA,  220  SCRA  716  (1993);  Lobres  v.  CA,  351  SCRA  716  (2001).  
of  the  right  to  redemption   2
 Ayson,  Jr.  V.  Paragas,  557  SCRA  50  (2008);   Bautista  v.  Unangst,  557  SCRA  256  
o Seller  remained  bound  for  the  repayment  of  the  money     (2008).  
3
o Transaction  had  origin  in  a  borrowing  of  money.    Claravall   v.   CA,   190   SCRA   439,   448   (1990);   Uy   v.   CA,   230   SCRA   664   (1994);  
Lobres   v.   CA,   351   SCRA   716   (2001);   Alvaro   v.   Ternida,   479   SCRA   288   (2006);  
! When   true   intention   was   not   to   convey  
Diño   v.   Jardines,   481   SCRA   226   (2006);   Raymundo   v.   Bandong,   526   SCRA   514  
ownership,   but   to   secure   housing   loan   of   (2007);   Aleligay   v.   Laserna,   537   SCRA   699   (2007);   Dorado   Vda.   De   Delfin   v.  
“buyer”   in   which   “seller”   had   a   direct   interest   Dellota,   542   SCRA   397   (2008);   Bautista   v.   Unangst,   557   SCRA   256   (2008);  
since   proceeds   were   to   be   applied   to   their   Rockville  Excell  International  Exim  Corp.  V.  Culla,  602  SCRA  124  (2009);    Heirs  of  
Jose  Reyes,  Jr.  v.  Reyes,  626  SCRA  758  (2010).  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
Heirs  of  Spouses  Nieves  and  Alfredo  Baldonado,  498  SCRA  365   (1994);   it   must   be   grossly   inadequate   or   shocking   to   the  
(2006);   but   it   is   not   conclusive,   for   it   may   be   rebutted   by   conscience.  Tio  v.  Abayata,  556  SCRA  175  (2008).  
competent  and  satisfactory  proof  to  the  contrary.  xSantiago   v.   • To   presume   a   contract   is   an   equitable   mortgaged   based   on  
Dizon,  543  SCRA  402  (2008).   gross   inadequacy   of   price,   it   must   be   clearly   shown   from   the  
• The  provisions  of  Article  1602  on  the  presumption  of  equitable   evidence   presented   that   the   consideration   was   in   fact   grossly  
mortgage  applies  also  to  a  contract  purporting  to  be  an  absolute   inadequate  at  the  time  the  sale  was  executed.  Mere  inadequacy  
sale.  xTuazon  v.  CA,  341  SCRA  707  (2000).1   of  price  is  not  sufficient  to  create  the  presumption.  xOlivares  v.  
• A  contract  purporting  to  be  an  absolute  sale  is  presumed  to  be   Sarmiento,  554  SCRA  384  (2008).5    
an   equitable   mortgage:   (a)   when   the   price   of   the   sale   is   • Mere   tolerated   possession   is   not   enough   to   prove   that   the  
unusually   inadequate; 2  (b)   when   the   vendor   remains   in   transaction   was   an   equitable   mortgage.   xRedondo   v.   Jimenez,  
possession  as  lessee  or  otherwise;3  (c)  when  after  the  expiration   536  SCRA  639  (2007).  
of  the  right  of  repurchase,  it  is  extended  by  the  buyer.    xHilado   • Payment   of   real   estate   taxes   is   a   usual   burden   attached   to  
v.   Heirs   of   Rafael   Medalla,   37   SCRA   257   (2002);4  (d)  when  the   ownership,  and  when  such  payment  is  coupled  with  continuous  
purported  seller  continues  to  collect  rentals  from  the  lessees  of   possession   of   the   property,   it   constitutes   evidence   of   great  
the   property   sold.   Ramos   v.   Dizon,   498   SCRA   17   (2006);   (e)   weight   that   a   person   under   whose   name   the   realty   taxes   were  
when   the   purported   seller   was   in   desperate   financial   situation   declared   has   a   valid   and   right   claim   over   the   land.   xGo   v.  
when  he  executed  the  purported  sale.  Bautista  v.  Unangst,  557   Bacaron,  472  SCRA  229  (2005).6    
SCRA   256   (2008);   or   under   threat   of   being   sued   criminally.   • However  mere  allegations  without  proof  to  support  inadequacy  
Ayson,  Jr.  V.  Paragas,  557  SCRA  50  (2008).   of   price,   or   when   continued   possession   by   the   seller   is  
• “Inadequacy   of   purchase   price”   is   considered   so   far   short   of   the   supported   by   a   valid   arrangement   consistent   with   the   sale,  
real  value  of  the  property  as  to  startle  a  correct  mind.  xSantiago   would   not   support   the   allegation   of   equitable   mortgage.  
v.  Dizon,  543  SCRA  402  (2008);   or     that   the   mind   revolts   at   it   as   xCirelos  v.  Hernandez,  490  SCRA  624  (2006).7  
such  that  a  reasonable  man  would  neither  directly  or  indirectly   • Although   under   the   agreement   the   seller   shall   remain   in  
be   likely   to   consent   to   it.     xVda  de  Alvarez  v.  CA,  231  SCRA  309   possession   of   the   property   for   only   one   year,   such   stipulation  
1 does  not  detract  from  the  fact  that  possession  of  the  property,  
 Zamora  v.CA,  260  SCRA  10  (1996).    
2
 Romulo  v.  Layug,  Jr.,  501  SCRA262  (2006).     an  indicium  of  ownership,  was  retained  by  the  alleged  vendor  to  
3
 Romulo  v.  Layug,  Jr.,  501  SCRA262  (2006);  Ayson,  Jr.  V.  Paragas,  557  SCRA  50  
5
(2008);   Bautista   v.   Unangst,   557   SCRA   256   (2008);   Rockville   Excell   International    Kings  Properties  Corp.  v.  Galido,  606  SCRA  137  (2009).  
6
Exim  Corp.  v.  Culla,  602  SCRA  124  (2009).      Lumayag  v.  Heirs  of  Jacinto  Nemeño,  526  SCRA  51  (2007).    
4 7
 Cruz  v.  Court  of  Appeals,  412  SCRA  614  (2003).    Austria  v.    Gonzales,  Jr.,  420  SCRA  414  (2004).    
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
qualify   the   arrangement   as   an   equitable   mortgage,   especially   a. Parties  entered  into  contract  denominated  as  a  contract  
when   it   was   shown   that   the   vendor   retained   part   of   the   of  sale.  
purchase  price.  xLegaspi  v.  Ong,  459  SCRA  122  (2005).1   b. Intention   was   to   secure   an   existing   debt   by   way   of  
• Under   Article   1602,   delay   in   transferring   title   is   not   one   of   the   mortgage.  
instances   enumerated   by   law—instances   in   which   an   equitable    
mortgage  can  be  presumed.  Nor  does  the  fact  that  the  original   7. Proof  By  Parole  Evidence;  Best  Evidence  Rule  
transaction   on   the   land   was   to   support   a   loan,   which   when   it   • That   is   why   parol   evidence   is   competent   and   admissible   in  
was   not   paid   on   due   date   was   negotiated   into   a   sale,   without   support   of   the   allegations   that   an   instrument   in   writing,  
evidence   that   the   subsequent   deed   of   sale   does   not   express   the   purporting  on  its  face  to  transfer  the  absolute  title  to  property,  
true   intentions   of   the   parties,   give   rise   to   a   presumption   of   or  to  transfer  the  title  with  a  right  to  repurchase  under  specified  
equitable   mortgage.   xCeballos   v.   Intestate   Estate   of   the   Late   conditions  reserved  to  the  seller,  was  in  truth  and  in  fact  given  
Emigdio  Mercado,  430  SCRA  323  (2004).   merely   as   security   for   the   repayment   of   a   loan.   xMariano   v.  
• The   fact   that   the   price   in   a   pacto   de   retro   sale   is   not   the   true   Court  of  Appeals,  220  SCRA  716  (1993).3    
value   of   the   property   does   not   justify   the   conclusion   that   the   • Matanguihan  v.  Court  of  Appeals,  275  SCRA  380  (1997)  
contract   is   one   of   equitable   mortgage;   in   fact   a   pacto   de   retro   o Parol   evidence   is   competent   to   prove   that   the  
sale,  the  practice  is  to  fix  a  relatively  reduced  price  to  afford  the   instrument  in  question  was  given  merely  as  a  security.  
seller  a  retro  every  facility  to  redeem  the  property  .  xIgnacio  v.   o Upon   proof   of   the   truth   of   such   allegations,   court   will  
CA,  246  SCRA  242  (1995).2   enforce  the  agreement  as  they  truly  intended.  
• Article   1602   being   remedial   in   nature,   may   be   applied   • Austria  v.  Gonzales  420  SCRA  414  (2004)  "  non-­‐application  of  
retroactively   in   cases   prior   to   the   effectivity   of   the   Civil   Code.   “best  evidence  rule”  to  equitable  mortgage  situations.  
xOlea  v.  CA,  247  SCRA  274  (1995).   o Decisive   factor   in   evaluating   intent   in   such   agreements  
  is  not  always  the  document  itself.  
6. Applicability  To  Deeds  Of  Absolute  Sale  (Article  1604)   o But   all   the   surrounding   circumstances.   Thus,   parole  
• Two   requisites   for   Article   1604   (in   relation   to   Article   1602)   to   evidence  is  acceptable.  
apply   3
 Lim  v.  Calaguas,  45  O.G.  No.  8,  p.  3394  (1948);  Cuyugan  v.  Santos,  34  Phil.  100  
(1916);   Matanguihan   v.   CA,   275   SCRA   380   (1997);   Hilado   v.   Heirs   of   Rafael  
Medlla,   37   SCRA   257   (2002);   Madrigal   v.   Court   of   Appeals,   456   SCRA   659  
1
 Oronce  v.  CA,  298  SCRA  133  (1998).     (2005);   Legaspi   v.   Ong,   459   SCRA   122   (2005);   Banga   v.   Bello,   471   SCRA   653  
2
 De  Ocampo  v.  Lim,  38  Phil.  579  (1918);  Feliciano  v.  Limjuco,  41  Phil.147  (1920);   (2005);  Diño  v.  Jardines,  481  SCRA  226  (2006);  Ayson,  Jr.  V.  Paragas,  557  SCRA  
Belonio  v.  Movella,  105  Phil.  756  (1959).   50  (2008).  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
  ! To   determine   whether   the   mortgage   had   been  
8. Remedies   Allowed   For   Equitable   Mortgage   (Articles   1454,   settled.  
1602,  1605)   ! And  if  not,  how  much  mortgagor  should  pay  to  
  settle  the  same.    
Article  1454.   • In   the   case   of   an   equitable   mortgage,   although   Article   1605  
If  an  absolute  conveyance  of  property  is  made  in  order  to  secure  the   which   allows   for   the   remedy   of   reformation,   nothing   therein  
performance   of   an   obligation   of   the   grantor   toward   the   grantee,   a   precludes   an   aggrieved   party   from   pursuing   other   remedies   to  
trust  by  virtue  of  law  is  established.  If  the  fulfillment  of  the  obligation   effectively  protect  his  interest  and  recover  his  property,  such  as  
is   offered   by   the   grantor   when   it   becomes   due,   he   may   demand   the   an   action   for   declaration   of   nullity   of   the   deed   of   sale   and  
reconveyance  of  the  property  to  him.   specific  performance.  xTolentino  v.  Court  of  Appeals,  386  SCRA  
  36  (2002).  
Article  1605.   o CLV:   However,   nullification   proposed   by   Tolentino  
In  the  cases  referred  to  in  articles  1602  and  1604,  the  apparent  vendor   would   be   unfair   –   it   would   leave   buyer   without   the  
may  ask  for  the  reformation  of  the  instrument.   necessary   security   contract,   which   remains   valid.  
(n)   Reformation   should   be   the   proper   remedy   to   enforce  
  true   intention.   But,   in   the   event   property   had   been   sold  
• When  a  contract  is  construed  to  be  an  equitable  mortgage,  the   to   a   third   party,   nullification   of   that   sale   and  
following  may  result:   reconveyance   should   be   allowed   provided   security  
o Any  money,  fruit  or  benefit  to  be  received  by  the  buyer   arrangement  over  the  property  is  preserved.  
as   rent   shall   be   considered   as   interest   subject   to   usury   • If   a   sale   a   retro   is   construed   to   be   an   equitable   mortgage,  
laws;   execution  of  an  affidavit  of  consolidation  is  of  no  consequence,  
o The   apparent   “Seller”   may   ask   for   reformation   of   the   and   “constructive   possession”   would   not   ripen   to   ownership  
instrument;   since   such   was   not   in   concept   of   an   owner.   Balatero   v.  
o Court   may   decree   that   “buyer”-­‐debtor   must   pay   his   Intermediate  Appellate  Court,  154  SCRA  530  (1987)  
outstanding  loan  to  “seller”-­‐creditor   • In   an   equitable   mortgage   situation,   the   consolidation   of  
o Where   trial   court   did   not   pass   upon   the   mortgagor’s   ownership  in  the  person  of  the  mortgagee  in  equity  upon  failure  
claim  that  he  paid  the  mortgage  obligation,  a  remand  of   of  the  mortgagor  in  equity  to  pay  the  obligation,  would  amount  
the  case  to  trial  court  is  in  order     to  a  pactum  commissorium.  The  only  proper  remedy  is  to  cause  
the  foreclosure  of  the  mortgage  in  equity.   xBriones-­‐Vasquez   v.  

 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
Court   of   Appeals,   450   SCRA   644   (2005);  or  to  determine  if  the   should   be   a   property   mortgaged   by   way   of   security   for   the  
principal  obligation  secured  by  the  equitable  mortgage  has  been   payment   of   the   principal   obligation,   and   (2)   there   should   be   a  
paid  or  settled.  xBanga  v.  Bello,  471  SCRA  653  (2005).   stipulation   for   automatic   appropriation   by   the   creditor   of   the  
• Expiration   of   “period   of   redemption”   in   an   equitable   mortgage   thing   mortgaged   in   case   of   non-­‐payment   of   the   principal  
does   not   prevent   the   purported   seller   from   extinguishing   the   obligation   within   the   stipulated   period.   Ong   v.   Roban   Lending  
main   contract   of   loan,   and   thus   also   the   equitable   mortgage   Corp.,  557  SCRA  516  (2008).  
contract.   • It  does  not  apply  when  the  security  for  a  debt  is  also  money  in  
o As  long  as  foreclosure  has  not  been  done.   the  form  of  time  deposit.  xConsing  v.  CA,  177  SCRA  14  (1989).  
  • Vda.  de  Zulueta  v.  Octaviano,  121  SCRA  314  (1983)  
9. Pactum  Commissorium  (Article  2088)     o Stipulation:  upon  redemption  by  buyer  from  third  party,  
  that  instrument  would  be  considered  a  deed  of  absolute  
Article  2088.   sale   from   seller   to   buyer.   Another   instrument   was  
The  creditor  cannot  appropriate  the  things  given  by  way  of  pledge  or   executed  entitled  “option  to  repurchase.”  
mortgage,   or   dispose   of   them.   Any   stipulation   to   the   contrary   is   null   o This  was  not  a  sale  a  retro  as  the  option  to  repurchase  
and  void.  (1859a)   was  in  a  separate  document.  
  o Neither   was   it   an   equitable   mortgage   as   it   was   not  
• A   stipulation   which   is   a   pactum   commisorium   enables   the   meant  to  secure  a  loan  –  no  application  of  Article  1602.  
mortgagee   to   acquire   ownership   of   the   mortgaged   properties   o SC:  It  was  not  a  pactum  commissorium  either  
without   need   of   any   foreclosure   proceedings—it   is   a   nullity   ! Seller  was  not  a  debtor  
being   contrary   to   the   provisions   of   Article   2088   of   the   Civil   ! Nothing  was  offered  as  security.  
Code.   xLumayag   v.   Heirs   of   Jacinto   Nemeño,   526   SCRA   315   o Public   Policy   on   pactum   commissorium   applies   only  
(2007).1   when   the   transaction   is   a   mortgage   or   other   security  
• The   elements   of   pactum   commissorium,   which   enable   the   contract   –   no   application   to   a   true   sale   or   transfer  
mortgagee   to   acquire   ownership   of   the   mortgaged   property   transaction.  
without  the  need  of  any  foreclosure  proceedings,  are:  (1)  there   • Guerrero   v.   Yñigo,   96   Phil.   37   (1954)   "   “mortgage   with  
conditional  sale”  
1
 Guerrero   v.   Yñigo,   96   Phil.   37   (1954);  Montevirgin   v.   CA,   112   SCRA   641   (1982);   o Stipulation:  Mortgagor  reserved  for  himself  the  right  to  
Vda.   de   Zulueta   v.   Octaviano,   121   SCRA   314   (1983);   Ong   v.   Roban   Lending   redeem  property  by  paying  back  the  amount  loaned.  On  
Corp.,   557   SCRA   516   (2008);   Heirs   of   Jose   Reyes,   Jr.   V.   Reyes,   626   SCRA   758  
(2010).  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
failure   of   mortgagor   to   exercise   such   right,   title   would   prohibited  by  law.  Ong   v.   Roban   Lending   Corp.,   557   SCRA   516  
pass  and  be  vested  in  the  mortgagee.   (2008).  
o SC:   Such   stipulation   cannot   be   construed   as   giving    
mortgagee  right  to  own  the  property  upon  failure  of  the   Solid  Homes  v.  Court  of  Appeals  
mortgagor   to   pay.   This   is   void   for   being   pactum    
commissorium.   Facts:   Solid   Homes   executed   in   favor   of   State   Financing   Center   a   Real  
• Montevirgin  v.  Court  of  Appeals,  112  SCRA  641  (1982)   Estate   Mortgage   on   its   properties   embraced   in   the   TCT,   in   order   to  
o Equitable   mortgage   guised   as   a   sale   a   retro   cannot   be   secure  the  payment  of  a  loan  of  10M  which  the  former  obtained  from  
enforced  as  a  sale     the  latter.  
o When   a   purported   sale   a   retro   is   found   to   be   an    
equitable   mortgage,   the   proper   remedy   in   case   the   A  year  later,  Solid  Homes  applied  for  and  was  granted  an  additional  loan  
borrower  does  not  pay  the  “price”  is  to  foreclose  on  the   of   1,   511,270.03   by   State   Financing,   and   to   secure   its   payment,   Solid  
mortgage.   executed   an   amendment   to   real   estate   mortgage   whereby   the   credits  
! There   can   be   no   loss   of   the   “seller’s”   right   to   secured  by  the  first  mortgage  on  the  abovementioned  properties  were  
redeem   for   that   would   be   pactum   increased  from  10M  to  11,511,270.03.  
commissorium.   Solid   homes   obtained   additional   credits   and   financing   facilities   from  
! Return   of   redemption   price   would   be   equaL   to   State   Financing   in   the   sum   of   1,499,811.97   and   to   secure   its   payment,  
paying   the   principal   loan,   thus   extinguishing   the   the  former  executed  the  amendment  to  real  estate  mortgage  whereby  
equitable  mortgage.   the  mortgage  executed  on  its  properties  was  again  amended  so  that  the  
• The   provision   in   a   MOA/Dacion   en   Pago   with   a   Right   to   loans   or   credits   secured   thereby   were   further   increased   from   11,511,  
Repurchase  that  in  the  event  the  borrower  fails  to  comply  with   270.03  to  13,011,082.00.  
the   new   terms   of   restructuring   the   loan,   the   agreement   shall    
automatically   operate   to   be   an   instrument   of   dacion   en   pago   When   the   obligations   became   due   and   payable,   State   Financing   made  
without   need   of   executing   any   new   document   does   not   repeated  demands  upon  Solid  homes  for  the  payment  thereof,  but  the  
constitute  pactum  commissorium.  Solid  Homes,  Inc.  v.  Court  of   latter  failed  to  do  so.  
Appeals,   275   SCRA   267   (1997);   the   questioned   contracts   were    
freely   and   voluntarily   executed   by   petitioners   and   respondent   is   State   Financing   filed   a   petition   for   extrajudicial   foreclosure   of   the  
of   no   moment,   pactum   commissorium   being   void   for   being   mortgages  who  in  pursuance  of  the  petition,  issued  a  notice  of  sheriff’s  
sale   whereby   the   mortgaged   properties   of   Solid   homes   and   the  

 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
improvements   existing   thereon,   including   the   V.V.   Soliven   Towers   II   informed   Solid   homes   of   the   registration   with   the   register   of   deeds   of  
Building   were   set   for   public   auction   sale   in   order   to   satisfy   the   full   their   memorandum   of   agreement/dacion   en   pago   and   the   issuance   of  
amount   of   Solid   homes’   mortgage   indebtedness,   the   interest   thereon,   the  new  certificates  of  title  in  the  name  of  State  Financing.  
and  the  fees  and  expenses  incidental  to  the  foreclosure  proceedings.    
  Clearly,   petitioner   was   not   prejudiced   by   the   non-­‐   annotation   of   such  
Before   the   scheduled   public   auction   sale,   the   mortgagor   Solid   homes   right   in   the   certificates   of   title   issued   in   the   name   of   State   Financing.  
made   representations   and   induced   State   Financing   to   forego   with   the   Also,   it   was   not   the   function   of   the   corporation   to   cause   said  
foreclosure   of   the   real   estate   mortgage.   By   reason   thereof,   State   annotation.  It  was  equally  the  responsibility  of  petitioner  to  protect  its  
Financing   agreed   to   suspend   the   foreclosure   of   mortgaged   properties,   own   rights   by   making   sure   that   its   right   of   repurchase   was   indeed  
subject  to  the  terms  and  conditions  they  agreed  upon,  and  in  pursuance   annotated  in  the  consolidated  titles  of  State  Financing.  
of   the   said   agreement,   they   executed   a   document   entitled    
MEMORANDUM  OF  AGREEMENT/DACION  EN  P  AGO.   The   only   legal   transgression   of   State   was   its   failure   to   observe   the  
  proper   procedure   in   effecting   the   consolidation   of   the   titles   in   its   name.  
  But  this  does  not  automatically  entitle  the  petitioner  to  damages  absent  
Issue:     convincing   proof   of   malice   and   bad   faith   on   the   part   of   private  
1. Whether   or   not   the   memorandum   of   agreement/dacion   en   respondent-­‐corporation.  
pago  executed  by  the  parties  is  valid  and  binding  "  YES    
2. Whether  or  not  solid  homes  can  claim  damages  arising  from  the   Doctrine:  
non-­‐annotation   of   its   right   of   repurchase   in   the   consolidated    
titles  "  NO   • BUT   SEE:   The  stipulation  in  the  promissory  note  providing  that  
  upon   failure   of   the   makers   to   pay   interests,   ownership   of   the  
Held:   The   Memorandum   of   Agreement/Dacion   En   Pago   was   valid   and   property  would  automatically  be  transferred  to  the  payee,  and  
binding,   and   that   the   registration   of   said   instrument   in   the   Register   of   the  covering  deed  of  sale  would  be  registered  is  in  substance  a  
Deeds  was  in  accordance  with  law  and  the  agreement  of  the  parties.   pactum   commissorium   in   violation   of   Article   2088,   and  
  consequently,  the  resultant  sale  is  void  and  the  registration  and  
Solid   homes   utterly   failed   to   prove   that   respondent   corporation   had   obtaining  of  new  title  in  the  name  of  the  buyer  would  have  be  
maliciously   and   in   bad   faith   caused   the   non-­‐annotation   of   petitioner’s  
right  of  repurchase  so  as  to  prevent  the  latter  from  exercising  such  right.  
On   the   contrary,   it   is   admitted   by   both   parties   that   State   Financing  

 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
declared   void   also.   A.  Francisco  Realty  v.  Court  of  Appeals,  298    
SCRA  349  (1998).1     Doctrine:  
   
A.  Francisco  Realty  v.  Court  of  Appeals   10. Final   Chance   to   Redeem   in   “Mistaken   Equitable   Mortgage”    
  (Article  1606)    
Facts:  A.  Francisco  Realty  and  Development  Corp.  granted  a  loan  worth    
P7.5M  in  favor  of  spouses  Javillonar,  to  which  the  latter  executed  three   Article  1606.  
documents:   a)   a   promissory   note   containing   the   interest   charge   of   4%   The   right   referred   to   in   article   1601,   in   the   absence   of   an   express  
monthly,   b)   a   deed   of   mortgage   over   the   subject   property,   c)   an   agreement,  shall  last  four  years  from  the  date  of  the  contract.  
undated   deed   of   sale   of   the   mortgaged   property.   Since   the   spouses    
allegedly  failed  to  comply  with  the  payments,  petitioner  registered  the   Should  there  be  an  agreement,  the  period  cannot  exceed  ten  years.  
sale  in  its  favor,  getting  a  TCT  issued  in  its  name  without  knowledge  by    
the   spouses.   Subsequently,   the   spouses   obtained   another   loan   worth   However,  the  vendor  may  still  exercise  the  right  to  repurchase  within  
P2.5M,  signing  another  promissory  note  in  favor  of  petitioner.  Petitioner   thirty   days   from   the   time   final   judgment   was   rendered  in  a  civil  action  
demanded   the   possession   of   the   property,   as   well   as   the   interest   on  the  basis  that  the  contract  was  a  true  sale  with  right  to  repurchase.  
payments,   to   which   the   spouses   refused   to   comply.   Petitioner   filed   an   (1508a)  
action   for   possession   in   the   RTC.   RTC   ruled   in   favor   of   petitioner,   but   CA    
reversed.   • Grant   Of   30-­‐Day   Redemption   Right   In   Case   Of   Litigation   And  
  Article  1606:  Expiration  of  period  ipso  jure  extinguishes  right  to  
Issue:  Whether  or  not  the  sale  was  considered  as  an  equitable  mortgage   redeem.   However,   when   there   was   a   previous   suit   concerning  
  the   nature   of   the   contract,   the   seller   may   still   exercise   right   to  
Held:   YES.   The   transfer   was   in   the   nature   of   pactum   commissorium,   repurchase   within   30-­‐days   from   the   time   final   judgment   was  
since   the   sale   was   really   considered   as   an   equitable   mortgage.   It   was   rendered  
really   intended   by   the   spouses   to   make   such   undated   deed   of   sale   a   o The   30-­‐day   period   contemplates   a   case   involving   a  
security.   Also,   when   petitioners   transferred   the   title   in   its   name,   the   controversy   as   to   the   nature   of   the   contract.   Court  
spouses  was  never  informed  of  such  action.  Such  transfer  was  therefore   decides   whether   it   is   a   pacto   de   retro   or   an   equitable  
void,  making  the  TCT  held  by  petitioners  null  and  void  as  well.   mortgage.   Tapas   v.   Court   of   Appeals,   69   SCRA   393  
(1976).  
1
 Legaspi  v.  Ong,  459  SCRA  122  (2005).  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
o The  30-­‐day  period  under  Article  1606  does  not  apply  if   mortgage;   and   (b)   that   if   they   truly   believed   the   sale   to   be   an  
the   courts   should   find   the   sale   to   be   absolute.     equitable   mortgage,   as   a   sign   of   good   faith,   they   should   have  
Pangilinan  v.  Ramos,  181  SCRA  359  (1990).   consigned   with   the   trial   court   the   amount   representing   their  
• Rationale  For  30-­‐Day  Period   alleged   loan,   on   or   before   the   expiration   of   the   right   to  
o Seller  may  have  considered  the  sale  to  be  an  equitable   repurchase.    Abilla  v.  Gobonseng,  374  SCRA  51  (2002).1  
mortgage.   Being   such,   the   seller   has   every   right   to    
extinguish   the   equitable   mortgage   by   paying-­‐up   the   Abilla  v.  Gobonseng  
loan   at   any   time   before   the   buyer   has   foreclosed   on   the    
mortgage.   Facts:  Spouses  Abilla  instituted  against  Spouses  Gobonseng  an  action  for  
o Allowing   the   expiration   of   the   redemption   period   is   specific  performance,  recovery  of  sum  of  money  and  damages,  seeking  
consistent  with  his  claim  that  the  sale  was  an  equitable   the   reimbursement   of   the   expenses   they   incurred   in   the   preparation  
mortgage.   and   registration   of   2   public   instruments-­‐-­‐   Deed   of   Sale   and   Option   to  
o Thus,   upon   finding   of   the   court   that   it   was   indeed   a   Buy.  As  a  defense,  Spouses  Gobonseng  contended  that  the  transaction  
pacto   de   retro,   then   the   seller   must   be   granted   a   final   covered   by   these   instruments   was   a   mortgage.   RTC   ruled   in   favor   of  
30-­‐day   period   within   which   to   decide   and   if   ever,   Spouses   Abilla,   stating   that   it   was   a   sale   giving   Spouses   Gobonseng   until  
exercise  his  right  to  redeem.   August  31,  1983  within  which  to  buy  back  the  17  lots  subject  of  the  sale.  
• However:   if   issue   was   whether   the   contract   was   an   absolute   CA  affirmed  and  held  that  the  transaction  was  a  pacto  de  retro  sale,  and  
sale  or  sale  a  retro   not  an  equitable  mortgage.  
o Judgment   of   sale   a   retro   does   not   give   the   seller   the   30-­‐ In   1999,   Spouses   Gobonseng   filed   with   the   RTC   an   urgent   motion   to  
day  period.     repuchase   the   lots   with   tender   of   payment,   which   was   denied.  
o In   such   a   case,   seller   is   negligent   for   not   exercising   the   However,   after   the   judge   inhibited   himself   from   the   case,   it   was  
right  to  redeem.   reraffled  to  a  different  branch,  which  granted  the  motion  to  repurchase.  
• Sellers   in   a   sale   judicially   declared   as   pacto   de   retro   may   not    
exercise   the   right   to   repurchase   within   the   30-­‐day   period   Issue:   Whether   or   not   Spouses   Gobonseng   may   exercise   the   right   to  
provided   under   Article   1606,   although   they   have   taken   the   repurchase,  as  stipulated  in  Article  1606(3).  
position  that  the  same  was  an  equitable  mortgage,  if  it  is  shown    
that   there   was   no   honest   belief   thereof   since:   (a)   none   of   the   Held:   NO.   Sellers   in   a   sale   judicially-­‐declared   as   pacto   de   retro   may   NOT  
circumstances   under   Article   1602   were   shown   to   exist   to  
warrant   a   conclusion   that   the   transaction   was   an   equitable   1
 Vda.  de  Macoy  v.  CA,  206  SCRA  244  (1992).    
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
exercise   the   right   to   repurchase   within   the   30-­‐day   period   provided   • When   sale   is   judicially   declared   pacto   de   retro,   and   after  
under  Article  1606,  although  they  have  taken  the  position  that  the  same   vendors   take   the   position   that   it   was   an   equitable   mortgage,  
was  an  equitable  mortgage,  if  it  shown  that  there  was  no  honest  belief   having  no  honest  belief  to  that  effect  –  vendors  may  not  avail  of  
thereof   since:   (a)   none   of   the   circumstances   under   Article   1602   were   the   additional   30-­‐day   period.   Abilla   v.   Gobonseng,   374   SCRA  
shown   to   exist   to   warrant   a   conclusion   that   the   transaction   was   an   429  (2002)  
equitable  mortgage;  and  (b)  that  if  they  truly  believed  the  sale  to  be  an   o If   they   truly   believed   that   the   sale   was   an   equitable  
equitable   mortgage,   as   a   sign   of   good   faith,   they   should   have   consigned   mortgage,   they   should   have   consigned   with   the   trial  
with   the   trial   court   the   amount   representing   their   alleged   loan,   on   or   court  the  amount  representing  the  alleged  loan.  
before  the  expiration  of  the  right  to  repurchase.   • However,  this  was  reversed.  Article  1606  only  applies  when  the  
  nature  of  the  transaction  was  put  in  issue  before  the  court.  
Doctrine:   o It   applies   in   a   situation   where   one   party   claims   that   it  
  was  a  pacto  de  retro,  and  the  other  claimed  that  it  was  
• An   equitable   mortgage   is   a   voidable   contract.   It   may   be   an   equitable   mortgage,   and   the   courts   decided   that   it  
annulled   within   four   (4)   years   from   the   time   the   cause   of   action   was  a  pactto  de  retro  sale.  
accrues.   Ayson,   Jr.   v.   Paragas,   557   SCRA   50   (2008).   [CLV:   o However,  applicability  still  rests  on  the  bona  fire  intent  
Thereafter,   it   may   be   enforced   against   the   provision   on   of   the   seller   a   retro,   if   he   truly   believed   that   the  
pactum  commissorium?]   transaction  was  an  equitable  mortgage.  
  o It   doesn’t   matter   what   the   buyer   intended   the  
11. Feigning  Equitable  Mortgage  Situation  to  Avail  of  Article  1606   transaction  to  be.  
• What  if  seller  feigns  defense  of  equitable  mortgage  in  order  to    
get  the  30-­‐day  period?   III.    Legal  Redemption  
• Where   evidence   established   no   honest   doubt   as   to   parties’    
intentions  to  make  it  a  sale  pacto  de  retro,  seller  would  not  be   A.  Definition    (Article  1619)  
entitled   to   Article   1606’s   benefits.   Adorable   v.   Inacala,   103    
SCRA  481  (1958)   Article  1619.  
• There   must   be   honest   belief   on   part   of   vendor   that   the   Legal  redemption  is  the  right  to  be  subrogated,  upon  the  same  terms  
agreement  was  in  reality  a  mortgage,  merely  to  give  security  for   and   conditions   stipulated   in   the   contract,   in   the   place   of   one   who  
an   obligation.   Vda.   De   Macoy   v.   Court   of   Appeals,   206   SCRA   acquires   a   thing   by   purchase   or   dation   in   payment,   or   by   any   other  
244  (1992)  and  Felicen  v.  Orias,  156  SCRA  586  (1987)   transaction   whereby   ownership   is   transmitted   by   onerous   title.  

 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
(1521a)   time  of  perfection   transfers  of  title  
  In  favor  of  the  seller   Given  to  a  third-­‐party  to  the  sale.  
• Legal   redemption   is   in   the   nature   of   a   privilege   created   by   law   Exercise  extinguishes  the   Constitutes  a  new  sale  in  
partly  for  reasons  of  public  policy  and  partly  for  the  benefit  and   underlying  contract  of  sale,  as   substitution  of  the  original  sale  
convenience   of   the   redemptioner,   to   afford   him   a   way   out   of   though  there  was  never  any  
what   might   be   a   disagreeable   or   [an]   inconvenient   association   contract  at  all  
into   which   he   has   been   thrust.   It   is   intended   to   minimize   co-­‐  
ownership.  xFernandez  v.  Tarun,  391  SCRA  653  (2002).1   B.  Legal  Redemption  Rights  Under  The  Civil  Code  
  1. Among  Co-­‐Heirs  (Article  1088)  
1. Rationale  For  Legal  Redemption    
• Reasons  of  public  policy   Article  1088.  
• Benefit  and  convenience  of  redemptioner,  to  afford  him  a  way   Should   any   of   the   heirs   sell   his   hereditary   rights   to   a   stranger   before  
out  of  what  might  be  an  inconvenient  association   the  partition,  any  or  all  of  the  co-­‐heirs  may  be  subrogated  to  the  rights  
• Intended  to  minimize  co-­‐ownership   of  the  purchaser  by  reimbursing  him  for  the  price  of  the  sale,  provided  
o Law   grants   a   co-­‐owner   the   exercise   of   said   right   of   they   do   so   within   the   period   of   one   month   from   the   time   they   were  
redemption  when  shares  of  other  owners  are  sold  to  a   notified  in  writing  of  the  sale  by  the  vendor.  (1067a)  
third  person    
• Once   property   is   subdivided   and   distributed   among   the   co-­‐ • No   right   of   legal   redemption   available   to   co-­‐heirs   when   sale  
owners,   no   more   reason   to   sustain   any   right   of   legal   covers  a  particular  property  of  the  estate.  
redemption.  Avila  v.  Barabat,  485  SCRA  8  (2006)   • Redemption   right   pertain   to   disposition   of   right   to   inherit,   and  
  not   when   there   is   a   sale   of   a   particular   property   of   the   estate.    
2. Salient   Distinctions   Between   Conventional   And   Legal   Right   Of   xPlan  v.  Intermediate  Appellate  Court,  135  SCRA  270  (1985).  
Redemption   • When   the   heirs   have   partitioned   the   estate   among   themselves  
  and  each  have  occupied  and  treated  definite  portions  thereof  as  
Conventional  (“right  a  retro”)   Legal  (“subrogation”)   their  own,  co-­‐ownership  has  ceased  even  though  the  property  is  
Can  only  be  constituted  by  express   Does  not  have  to  be  expressly   still   under   one   title,   and   the   sale   by   one   of   the   heirs   of   his  
reservation  in  a  contract  of  sale  at   reserved,  covers  other  onerous   definite  portion  cannot  trigger  the  right  of  redemption  in  favor  
of   the   other   heirs.  xVda.  De  Ape  v.  Court  of  Appeals,  456  SCRA  
1
 Basa  v.  Aguilar,  117  SCRA  128  (1982).     193  (2005).  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
• The   heirs   who   actually   participated   in   the   execution   of   the   • When   the   seller   a   retro   dies,   the   right   to   redeem   cannot   be  
extrajudicial   settlement,   which   included   the   sale   to   a   third   exercised  by  a  co-­‐heir  alone,  since  the  right  to  redeem  belonged  
person  of  their  pro  indiviso  shares  in  the  property,  are  bound  by   in   common   to   all   the   heirs.   xDe   Guzman   v.   Court   of   Appeals,  
the   same;   while   the   co-­‐heirs   who   did   not   participate   are   given   148  SCRA  75  (1987).  
the  right  to  redeem  their  shares  pursuant  to  Article  1088.  xCua   • Redemption   by   co-­‐owner   redounds   to   the   benefit   of   all   other  
v.  Vargas,  506  SCRA  374  (2006).   co-­‐owners.  xMariano  v.  Court  of  Appeals,  222  SCRA  736  (1993);  
  and   the   30-­‐day   period   for   the   commencement   of   the   right   to  
2. Among  Co-­‐Owners  (Article  1620)   exercise   the   legal   redemption   right,   even   when   such   right   has  
  been  recognized  to  exist  in  a  final  and  executory  court  decision,  
Article  1620.   does   not   begin   from   the   entry   of   judgment,   but   from   the  
A  co-­‐owner  of  a  thing  may  exercise  the  right  of  redemption  in  case  the   written   notice   served   by   the   seller   to   the   party   entitled   to  
shares   of   all   the   other   co-­‐owners   or   of   any   of   them,   are   sold   to   a   third   exercise  such  redemption  right.  Guillen   v.   Court   of   Appeals,   589  
person.   If   the   price   of   the   alienation   is   grossly   excessive,   the   SCRA  399  (2009).  
redemptioner  shall  pay  only  a  reasonable  one.   • The   requisites   for   the   exercise   of   legal   redemption   are   as  
  follows:   (1)   there   must   be   co-­‐ownership;   (2)   one   of   the   co-­‐
Should   two   or   more   co-­‐owners   desire   to   exercise   the   right   of   owners  sold  his  right  to  a  stranger;  (3)  the  sale  was  made  before  
redemption,  they  may  only  do  so  in  proportion  to  the  share  they  may   the   partition   of   the   co-­‐owned   property;   (4)   the   right   of  
respectively  have  in  the  thing  owned  in  common.  (1522a)   redemption  must  be  exercised  by  one  or  more  co-­‐owners  within  
  a  period  of  thirty  days  to  be  counted  from  the  time  he  or  they  
• The   right   of   redemption   may   be   exercised   by   a   co-­‐owner   only   were   notified   in   writing   by   the   co-­‐owner   vendor;   and   (5)   the  
when   part   of   the   community   property   is   sold   to   a   stranger,   now   vendee   must   be   reimbursed   the   price   of   the   sale.   Calma   v.  
when  sold  to  another  co-­‐owner  because  a  new  participant  is  not   Santos,  590  SCRA  359  (2009).  
added  to  the  co-­‐ownership.    xFernandez  v.  Tarun,  391  SCRA  653    
(2002).   3. Effect  Of  De  Facto  Partition  Among  Co-­‐Heirs  And  Co-­‐Owners  
o Should   two   or   more   co-­‐owners   desire   to   exercise   the   • When   the   heirs   have   partitioned   the   estate   among   themselves  
right  of  redemption,  they  may  do  so  only  in  proportion   and  each  have  occupied  and  treated  definite  portions  thereof  as  
to  the  share  they  have  in  the  co-­‐owned  thing.   their  own,  co-­‐ownership  has  ceased  even  though  the  property  is  
o Right   of   redemption   of   co-­‐owners   excludes   adjoining   still   under   one   title,   and   the   sale   by   one   of   the   heirs   of   his  
owners.  Article  1623(2)   definite  portion  cannot  trigger  the  right  of  redemption  in  favor  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
of  the  other  heirs.  Vda.   De   Ape   v.   Court   of   Appeals,   456   SCRA   The  owners  of  adjoining  lands  shall  also  have  the  right  of  redemption  
193  (2005)   when   a   piece   of   rural   land,   the   area   of   which   does   not   exceed   one  
• For  the  right  of  redemption  to  be  exercised,  co-­‐ownership  must   hectare,  is  alienated,  unless  the  grantee  does  not  own  any  rural  land.  
exist  at  the  time  of  the  conveyance  is  made  by  a  co-­‐owner  and    
the   redemption   is   demanded   by   the   other   co-­‐owner   or   co-­‐ This   right   is   not   applicable   to   adjacent   lands   which   are   separated   by  
owners.    xAvila  v.  Barabat,  485  SCRA  8  (2006).   brooks,   drains,   ravines,   roads   and   other   apparent   servitudes   for   the  
  benefit  of  other  estates.  
4. Distinguishing  Between  Right  Of  Redemption  Of  Co-­‐Heirs  And    
Co-­‐Owners  –     If   two   or   more   adjoining   owners   desire   to   exercise   the   right   of  
• Article   1620   includes   the   doctrine   that   a   redemption   by   a   co-­‐ redemption   at   the   same   time,   the   owner   of   the   adjoining   land   of  
owner   of   the   property   owned   in   common,   even   when   he   uses   smaller  area  shall  be  preferred;  and  should  both  lands  have  the  same  
his  own  fund,  within  the  period  prescribed  by  law  inures  to  the   area,  the  one  who  first  requested  the  redemption.  (1523a)    
benefit   of   all   the   other   co-­‐owners.   xAnnie   Tan   v.   Court   of    
Appeals,  172  SCRA  660  (1989).1   • Right   of   redemption   covers   only   “resale”   and   does   not   cover  
• Article   1088,   the   heir   may   redeem   for   himself   the   heredity   exchanges  or  barter  of  properties.  De  Santos  v.  City  of  Manila,  
rights  sold  by  a  co-­‐heir.     45  SCRA  409  (1972).  
• Mariano   v.   Court   of   Appeals,   220   SCRA   716   (1993)   "   co-­‐heir   • Requisite  to  show  property  previously  bought  on  “speculation”  
exercised   legal   redemption   over   parcel   of   land   belonging   to   dropped.  xLegaspi  v.  CA,  69  SCRA  360  (1976).  
estate  of  decedent.  Thus,  which  redemption  clause  to  apply?   • Right   of   redemption   covers   only   “resale”   and   does   not   cover  
o Distinction  between  1088  and  1620   exchanges  or  barter  of  properties  xDe  Santos  v.  City  of  Manila,  
o When   sake   of   particular   property   or   interest   in   45   SCRA   409   (1972);   and   cannot   arise   unless   both   adjacent  
property,  Article  1620.   lands  are  rural  lands.  xPrimary   Structures   Corp.   v.   Valencia,   409  
o When  sale  of  hereditary  right  itself,  Article  1088.   SCRA  371  (2003).  
  • When   there   is   no   issue   that   when   the   adjoining   lands   involved  
5. Among  Adjoining  Owners  Of  Rural  Lands  (Articles  1621)   are   both   rural   lands,   then   the   right   of   redemption   can   be  
  exercised   and   the   only   exemption   provided   is   when   the   buyer  
Article  1621.     can   show   that   he   did   not   own   any   other   rural   land.   But   the  
burden  of  proof  to  provide  for  the  exception  lies  with  the  buyer.    
1
 De  Guzman  v.  CA,  148  SCRA  75  (1987);  Adille  v.  CA,  157  SCRA  455  (1988).  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
xPrimary   Structures   Corp.   v.   Valencia,   409   SCRA   371,   374   • Legaspi  v.  Court  of  Appeals,  69  SCRA  360  (1976)  "  practically  
(2003).   did  away  with  requirement  of  having  purchased  land  previously  
  for  speculation.  
6. Among  Adjoining  Owners  of  Urban  Land  (Article  1622)   • Sen   Po   Ek   Marketing   v.   Martinez,   325   SCRA   210   (2000)   held  
  that   Article   1622   only   deals   with   small   urban   lands   bought   for  
Article  1622.   speculation.  
Whenever  a  piece  of  urban  land  which  is  so  small  and  so  situated  that   o Right   does   not   apply   to   a   lessee   trying   to   buy   the   land  
a   major   portion   thereof   cannot   be   used   for   any   practical   purpose   he  is  leasing.  
within  a  reasonable  time,  having  been  bought  merely  for  speculation,    
is   about   to   be   re-­‐sold,   the   owner   of   any   adjoining   land   has   a   right   of   7. Sale   of   Credit   in   Litigation   (Article   1634)     –   30   days   from   notice  
pre-­‐emption  at  a  reasonable  price.   of  demand  to  pay.  
   
If   the   re-­‐sale   has   been   perfected,   the   owner   of   the   adjoining   land   shall   Article  1634.  
have  a  right  of  redemption,  also  at  a  reasonable  price.   When  a  credit  or  other  incorporeal  right  in  litigation  is  sold,  the  debtor  
  shall  have  a  right  to  extinguish  it  by  reimbursing  the  assignee  for  the  
When  two  or  more  owners  of  adjoining  lands  wish  to  exercise  the  right   price   the   latter   paid   therefor,   the   judicial   costs   incurred   by   him,   and  
of  pre-­‐emption  or  redemption,  the  owner  whose  intended  use  of  the   the  interest  on  the  price  from  the  day  on  which  the  same  was  paid.  
land  in  question  appears  best  justified  shall  be  preferred.  (n)    
  A  credit  or  other  incorporeal  right  shall  be  considered  in  litigation  from  
• Ortega   v.   Orcine,   38   SCRA   276   (1971)   "   the   purpose   of   this   the  time  the  complaint  concerning  the  same  is  answered.  The  debtor  
provision   is   to   discourage   speculation   in   real   estate   and   the   may   exercise   his   right   within   thirty   days   from   the   date   the   assignee  
aggravation  of  the  housing  problems.   demands  payment  from  him.  (1535)  
o “Urban”  "  refers  to  the  character  of  the  community  or    
vicinity  in  which  the  land  is  found.   C.  When  Period  of  Legal  Redemption  Begins    (Article  1623)  
• Redemption  of  Urban  land  only  applies  when  there  is  resale    
o No   right   of   redemption   when  urban   land   is   transferred   Article  1623.  
under  “exchange”  of  properties.   The   right   of   legal   pre-­‐emption   or   redemption   shall   not   be   exercised  
except   within   thirty   days   from   the   notice   in   writing   by   the   prospective  
vendor,   or   by   the   vendor,   as   the   case   may   be.   The   deed   of   sale   shall  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
not   be   recorded   in   the   Registry   of   Property,   unless   accompanied   by   an   the   same   is   beneficial   to   the   children.   xBadillo   v.   Ferrer,   152  
affidavit  of  the  vendor  that  he  has  given  written  notice  thereof  to  all   SCRA  407  (1987).  
possible  redemptioners.   • The  notice  required  under  Article  1623  is  deemed  to  have  been  
  complied   with   when   the   other   co-­‐owner   has   signed   the   Deed   of  
The   right   of   redemption   of   co-­‐owners   excludes   that   of   adjoining   Extrajudicial   Partition   and   Exchange   of   Shares   which   embodies  
owners.  (1524a)   the   disposition   of   part   of   the   property   owned   in   common.  
  xFernandez  v.  Tarun,  391  SCRA  653  (2002).  
1. Kind  Of  Notice  Contemplated  By  Law   • The   existence   of   a   clause   in   the   deed   of   sale   to   the   effect   that  
• Both   the   letter   and   the   spirit   of   the   law   argue   against   any   the   vendor   has   complied   with   the   provisions   of   Article   1623,  
attempt   to   widen   the   scope   of   the   notice   specified   in   the   Civil   cannot   be   taken   to   “being   the   written   affirmation   under   oath,  
Code   to   include   any   other   kind   of   notice,   such   as   verbal   or   by   as   well   as   the   evidence,   that   the   required   written   notice   to  
registration.   Marinao   v.   Court   of   Appeals,   222   SCRA   736   petitioner   under   Article   1623   has   been   meet,   for   the   person  
(1993).1   entitled   to   the   right   is   not   a   party   to   the   deed   of   sale.     xPrimary  
o Neither   the   registration   of   the   sale   xCabrera   v.   Structures  Corp.  v.  Valencia,  409  SCRA  371  (2003).  
Villanueva,  160  SCRA  627  (1988),   nor   the   annotation   of    
an  adverse  claim  xVda.   De   Ape   v.   Court   of   Appeals,   456   2. Counting  Of  The  Period  
SCRA   193   (2005),   nor   notice   being   given   by   the   city   • The   30-­‐day   period   for   the   commencement   of   the   right   to  
treasurer   xVerdad   v.   Court   of   Appeals,   256   SCRA   593   exercise   the   legal   redemption   right,   even   when   such   right   has  
(1996),   comply   with   the   written   notice   required   under   been  recognized  to  exist  in  a  final  and  executory  court  decision,  
Article  1623  to  begin  the  tolling  of  the  30-­‐day  period  of   does   not   begin   from   the   entry   of   judgment,   but   from   the  
redemption.     written   notice   served   by   the   seller   to   the   party   entitled   to  
• The  written  notice  of  sale  is  mandatory,  notwithstanding  actual   exercise  such  redemption  right.  Guillen  v.  Court  of  Appeals,  589  
knowledge   of   a   co-­‐owner,   in   order   to   remove   all   uncertainties   SCRA  399  (2009).  
about   the   sale,   its   terms   and   conditions,   as   well   as   its   efficacy   • The   interpretation   of   Article   1623   where   there   is   a   need   for  
and  status.    xVerdad  v.  Court  of  Appeals,  256  SCRA  593  (1996).   notice   in   writing,   should   always   tilt   in   favor   of   the   redemptioner  
• Notice  to  minors  may  validly  be  served  upon  parents  even  when   and   against   the   buyer,   since   the   purpose   is   to   reduce   the  
the  latter  have  not  been  judicially  appointed  as  guardians  since   number  of  participants  until  the  community  is  terminated,  being  
1
a   hindrance   to   the   development   and   better   administration   of  
 Citing   Hernaez   v.   Hernaez,   32   Phil.   214   (1915);  Castillo   v.   Samonte,   106   Phil.  
1024  (1960).  
the   property.   “It   is   a   one-­‐way   street,”   in   favor   of   the  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
redemptioner  since  he  can  compel  the  buyer  to  sell  to  him  but   v.  CA,  148  SCRA  507  (1987),  which  allowed  the  giving  of  
he   cannot   be   compelled   by   the   vendee   to   buy.     xHermoso   v.   notice  by  the  buyer  to  be  effective  under  Article  1623;  
Court  of  Appeals,  300  SCRA  516  (1998).   o When   notice   is   given   by   the   proper   party   (i.e.,   the  
  seller),  no  particular  form  of  written  notice  is  prescribed  
3. Notice  Must  Cover  Perfected  Sale   under  Article  1623,  so  that  the  furnishing  of  the  copies  
• The   30-­‐day   period   does   not   begin   to   run   in   the   absence   of   of   the   deeds   of   sale   to   the   co-­‐owner   would   be  
written  notification  coming  from  the  seller.  xCua  v.  Vargas,  506   sufficient,   as   held   previously   in   xDistrito   v.   CA,   197  
SCRA   374   (2006);1  and  it  must  be  a  written  notice  of  a  perfected   SCRA   606   (1991);   Conejero   v.   CA,   16   SCRA   775   (1966);  
sale.   xSpouses   Doromal   v.   Court   of   Appeals,   66   SCRA   575   xBadillo   v.   Ferrer,   152   SCRA   407   (1987),  but  only  on  the  
(1975).   form   of   giving   notice   but   not   on   the   ruling   of   who   is   the  
• Notice  must  be  with  execution  and  delivery  of  the  deed  of  sale.   proper  party  to  give  notice;      
o Period   should   not   be   deemed   to   have   commenced   o Affirmed   ruling   in   xAlonzo   v.   Intermediate   Appellate  
unless  notice  is  made  after  execution  of  formal  deed  of   Court,   150   SCRA   259   (1987),   that   the   filing   of   the   suit  
disposal.   for  ejectment  or  collection  of  rentals  against  a  co-­‐owner  
• This  doctrine  cannot  be  applied  to  legal  pre-­‐emption.   actually   dispenses   with   the   need   for   a   written   notice,  
  and   must   be   construed   as   commencing   the   running   of  
4. Summation  On  Strict  Rules  On  Article  1623  Concerning  Notice   the  period  to  exercise  the  right  of  redemption,  since  the  
• Francisco   v.   Boiser,   332   SCRA   305   (2000),  summarized  the  case-­‐ filing   of   the   suit   amounted   to   actual   knowledge   of   the  
law  on  Article  1623,  and  with  definitiveness  declared:   sale   from   which   the   30-­‐day   period   of   redemption  
o For   the   30-­‐day   redemption   period   to   begin   to   run,   commences  to  run.    
notice  must  be  given  by  the  seller;  and  that  notice  given    
by   the   buyer   or   even   by   the   Register   of   Deeds   is   not   Francisco  v.  Boiser  
sufficient.   This   expressly   affirms   the   original   ruling   in    
Butte  v.  Manuel  Uy  and  Sons,  Inc.,  4  SCRA  526  (1962),   Facts:   Petitioner   Adalia   Francisco   and   three   of   her   sisters,   Ester,  
as   affirmed   in   xSalatandol   v.   Retes,   162   SCRA   568   Elizabeth,   and   Adeluisa,   were   co-­‐owners   of   four   parcels   of   registered  
(1988).   This   expressly   overruled   the   ruling   in   xEtcuban   land  in  Caloocan  City.  On  August  1979,  they  sold  1/5  of  their  undivided  
share  to  their  mother,  Adela  Blas,  for  PhP10,000,  making  her  a  co-­‐owner  
of  the  real  property  to  that  extent.    
1
 Garcia   v.   Calaliman,   17   SCRA   201   (1989);   Mariano   v.   Court   of   Appeals,   222  
 
SCRA  736  (1993).    
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
7  years  later,  in  1986,  however,  Adela  sold  her  1/5  share  for  PhP10,000   compliance   with   the   notice   requirement   of   Article   1623   for   the   purpose  
to  respondent  Zenaida  Boiser,  another  sister  of  petitioner.   of  legal  redemption.  
In  1992  or  6  years  after  the  sale,  Adalia  received  summons  with  a  copy    
of   a   complaint   by   Zenaida   demanding   her   share   in   the   rentals   being   Held:   The   petitioner   points   out   that   the   case   does   not   concern   the  
collected   from   the   tenants   of   the   Ten   Commandments   Building,   which   particular   form   in   which   such   notice   must   be   given,   but   rather   the  
stands  on  the  co-­‐owned  property.  Adalia  then  informs  Zenaida  that  she   sufficiency  of  notice  given  by  a  vendee  in  lieu  of  the  required  notice  to  
was   exercising   her   right   of   redemption   as   co-­‐owner   of   the   subject   be  given  by  the  vendor  or  prospective  vendor.  
property,  depositing  for  that  purpose  PhP10,000  with  the  Clerk  of  Court    
The  case  was  however  dismissed  after  Zenaida  was  declared  non-­‐suited,   The  text  of  Article  1623  clearly  and  expressly  prescribes  that  the  30  days  
and  Adalia’s  counterclaim  was  thus  dismissed  as  well.   for   making   the   redemption   shall   be   counted   from   notice   in   writing   by  
  the   vendor   it   makes   sense   to   require   that   notice   be   given   by   the   vendor  
3   years   after,   Adalia   institutes   a   complaint   demanding   the   redemption   and  nobody  else,  since  the  vendor  of  an  undivided  interest  is  in  the  best  
of   the   property,   contending   that   the   30-­‐   day   period   for   redemption   position   to   know   who   are   his   co-­‐owners,   who   under   the   law   must   be  
under  Art.  1623  had  not  begun  to  run  against  her  or  any  of  the  other  co-­‐ notified  of  the  sale.  
owners,   since   the   vendor   Adela   did   not   inform   them   about   the   sale,    
which   fact   they   only   came   to   know   of   when   Adalia   received   the   Notice  by  the  co-­‐owner  likewise  removes  all  doubt  as  to  the  fact  of  the  
summons   in   1992.   Zenaida   on   the   other   hand   contends   that   Adalia   sale,  its  perfection,  and  its  validity  by  not  immediately  notifying,  or  not  
already   knew   of   the   sale   even   before   she   received   the   summons   since   notifying   at   all,   a   co-­‐   owner,   the   vendor   can   delay   or   even   effectively  
Zenaida   had   informed   Adalia   by   letter   of   the   sale   with   a   demand   for   her   prevent  the  meaningful  exercise  of  the  right  of  redemption.  
share   of   the   rentals   three   months   before   filing   suit,   attaching   to   it   a    
copy  of  the  deed  of  sale.  Adalia’s  receipt  of  the  said  letter  is  proven  by   However,   it   would   be   unjust   in   the   case   at   bar   to   require   the   vendor  
the   fact   that   within   a   week,   she   advised   the   tenants   of   the   building   to   Adela   to   serve   notice   of   the   sale,   when   the   fact   has   already   been  
disregard   Zenaida’s   letter-­‐demand.   The   trial   court   dismissed   the   established   in   both   lower   courts   Adalia   has   effectively   exercised   her  
complaint   for   legal   redemption,   holding   that   Art.   1623   does   not   right   when   she   deposited   the   P10,000   redemption   price   7   days   after  
prescribe  any  particular  form  of  notifying  co-­‐owners  on  appeal,  the  CA   receiving  the  summons.  
affirmed.    
  5. Rare  Exceptions:  
Issue:  Whether   or   not   the   letter-­‐demand   by   Zenaida   to   Adalia,   to   which   • Alonzo   v.   Intermediate   Appellate   Court,   150   SCRA   259   (1987)  
the   deed   of   sale   was   attached,   can   be   considered   as   sufficient   As  An  Exception  To  Article  1088  

 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
o Situation   where   co-­‐heirs   lived   with   purchaser   in   the   • Interpretation  in  these  cases  tilts  in  favor  of  the  redemptioner.  
same  lot,  but  the  action  was  brought  only  after  13  years   • The  written  notice  of  sale  is  mandatory,  notwithstanding  actual  
of  knowing  about  the  same.  The  co-­‐heirs  are  deemed  to   knowledge   of   a   co-­‐owner,   in   order   to   remove   all   uncertainties  
have   received   actual   notice   of   the   same   (even   if   no   about   the   sale,   its   terms   and   conditions,   as   well   as   its   efficacy  
written  notice).  Laches  seems  to  be  the  main  principal.     and  status.  Verdad  v.  Court  of  Appeals,  256  SCRA  593  (1996)  
o When   the   buyers   took   possession   of   the   property   o Written   notice   required   was   enacted   to   remove   all  
immediately   after   the   execution   of   the   deed   of   sale   in   doubts  about  the  alienation.  
their  favor  and  lived  in  the  midst  of  the  other  co-­‐owners    
who   never   questioned   the   same.   xPilapil   v.   CA,   250   B.   Francisco   v.   Boiser,   332   SCRA   305   (2000)   –   Requirements   under  
SCRA  560  (1995).   Article  1623  
• Exception   To   The   Exception   (i.e.   Exception   To   The   Alonzo   1. Notice   must   be   given   by   seller   in   order   for   30-­‐day   redemption  
Doctrine)  When  the  sale  to  the  buyer  was  effected  through  the   period  to  run.  
co-­‐owner  who  acted  as  the  broker,  and  never  indicated  that  he   2. No  particular  form  is  prescribed.  
would   exercise   his   right   to   redeem.   xDistrito   v.   CA,   197   SCRA   3. Filing   of   suit   for   ejectment   or   collection   of   rentals   dispenses  
606  (1991).   with   need   for   written   notice   –   filing   of   the   suit   amounts   to  
• Verdad  v.  Court  of  Appeals,  256  SCRA  593  (1996)  –  Alonzo   and   actual  knowledge  of  the  sale.  
Distrito  are  special  exceptions   • Other   co-­‐owner   signs   deed   of   partition   embodying   disposition  
o Co-­‐owner  learned  of  the  sale  through  city  treasurer   of  property  –  proper  notice.  Fernandez  v.  Tarun,  391  SCRA  653  
o Her   exercise   of   right   of   redemption   was   timely:   no   (2002)  
written  notice  of  sale  was  ever  given  to  her,  thus  the  30-­‐  
day  period  had  not  yet  run.   D.  Other  Legal  Redemption  Rights  
  1. Redemption  in  Patents    (Sec.  119,  C.A.  141)  
Summation  On  Strict  Rules  On  Notice    
  COMMONWEALTH  ACT  NO.  141  
A.   Hermoso   v.   Court   of   Appeals,   300   SCRA   516   (1998).   Notice  in  writing   Section  119.  
is  needed  in  3  other  species  of  legal  redemption   Every   conveyance   of   land   acquired   under   the   free   patent   or  
1. Case  where  share  of  co-­‐owners  are  sold  to  a  third  person     homestead  provisions,  when  proper,  shall  be  subject  to  repurchase  by  
2. Redemption  of  adjoining  rural  land   the   applicant,   his   widow,   or   legal   heirs,   within   a   period   of   five   years  
3. Redemption  of  adjoining  urban  land.   from  the  date  of  the  conveyance.  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
  pay   the   taxes,   penalties   and   costs,   the   Internal   Revenue   Officer  
• Sale   within   5   years   void   even   when   in   favor   of   homesteader’s   conducting   the   sale   shall   declare   the   property   forfeited   to   the  
own  child.   Government   in   satisfaction   of   the   claim   in   question   and   within   two   (2)  
• Right   to   repurchase   is   granted   by   law   and   need   not   be   provided   days   thereafter,   shall   make   a   return   of   his   proceedings   and   the  
for   in   the   deed   of   sale.     xBerin   v.   Court   of   Appeals,   194   SCRA   forfeiture  which  shall  be  spread  upon  the  records  of  his  office.  It  shall  
508  (1991).   be  the  duty  of  the  Register  of  Deeds  concerned,  upon  registration  with  
• General   Rule:   Under  the  free  patent  or  homestead  provisions  of   his  office  of  any  such  declaration  of  forfeiture,  to  transfer  the  title  of  
the   Public   Land   Act   a   period   of   five   (5)   years   from   the   date   of   the  property  forfeited  to  the  Government  without  the  necessity  of  an  
conveyance   is   provided,   to   be   reckoned   from   the   date   of   the   order  from  a  competent  court.  
sale   and   not   from   the   date   of   registration   in   the   office   of   the    
Register  of  Deeds.    xLee  Chuy  Realty  Corp.  v.  CA,  250  SCRA  596   Within  one  (1)  year  from  the  date  of  such  forfeiture,  the  taxpayer,  or  
(1995).1   any   one   for   him   may   redeem   said   property   by   paying   to   the  
o Exception:   Where   homestead   was   sold   at   extrajudicial   Commissioner   or   the   latter's   Revenue   Collection   Officer   the   full  
foreclosure,  5  year  period  begins  to  run  after  expiration   amount   of   the   taxes   and   penalties,   together   with   interest   thereon   and  
of   one   year   period   of   repurchase   allowed   in   the   costs   of   sale,   but   if   the   property   be   not   thus   redeemed,   the  
extrajudicial  foreclosure.   forfeiture  shall  become  absolute.  
• Section  119  of  Public  Land  act  should  be  read  with  Article  1616    
of  New  Civil  Code  –  there  should  be  a  return  of  the  price/tender   3. Redemption   by   Judgment   Debtor   (Secs.   27-­‐28,   Rule   39,   Rules  
of  payment.   of  Civil  Procedure)  
o Mere  notice  of  intent  to  redeem  is  insufficient.    
  1997  RULES  OF  CIVIL  PROCEDURE  
2. Redemption  in  Tax  Sales    (Sec.  215,  NIRC  of  1997)   Section  27.  Who  may  redeem  real  property  so  sold.  
  Real   property   sold   as   provided   in   the   last   preceding   section,   or   any  
NATIONAL  INTERNAL  REVENUE  CODE  OF  1997   part   thereof   sold   separately,   may   be   redeemed   in   the   manner  
Section  215.  Forfeiture  to  Government  for  Want  of  Bidder.   hereinafter  provided,  by  the  following  persons:  
In  case  there  is  no  bidder  for  real  property  exposed  for  sale  as  herein    
above   provided   or   if   the   highest   bid   is   for   an   amount   insufficient   to   (a)   The   judgment   obligor;   or   his   successor   in   interest   in   the   whole   or  
any  part  of  the  property;  
1  
 Mata  v.  Court  of  Appeals,  318  SCRA  416  (1999).  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
(b)   A   creditor   having   a   lien   by   virtue   of   an   attachment,   judgment   or   assessments  or  taxes  which  the  last  previous  redemptioner  paid  after  
mortgage   on   the   property   sold,   or   on   some   part   thereof,   subsequent   the  redemption  thereon,  with  interest  thereon,  and  the  amount  of  any  
to   the   lien   under   which   the   property   was   sold.   Such   redeeming   liens  held  by  the  last  redemptioner  prior  to  his  own,  with  interest.  
creditor  is  termed  a  redemptioner.  (29a)    
  Written   notice   of   any   redemption   must   be   given   to   the   officer   who  
Section  28.  Time  and  manner  of,  and  amounts  payable  on,  successive   made   the   sale   and   a   duplicate   filed   with   the   registry   of   deeds   of   the  
redemptions;  notice  to  be  given  and  filed.   place,  and  if  any  assessments  or  taxes  are  paid  by  the  redemptioner  or  
The   judgment   obligor,   or   redemptioner,   may   redeem   the   property   if   he   has   or   acquires   any   lien   other   than   that   upon   which   the  
from  the  purchaser,  at  any  time  within  one  (1)  year  from  the  date  of   redemption   was   made,   notice   thereof   must   in   like   manner   be   given   to  
the  registration  of  the  certificate  of  sale,  by  paying  the  purchaser  the   the   officer   and   filed   with   the   registry   of   deeds;   if   such   notice   be   not  
amount   of   his   purchase,   with   the   per   centum   per   month   interest   filed,   the   property   may   be   redeemed   without   paying   such  
thereon  in  addition,  up  to  the  time  of  redemption,  together  with  the   assessments,  taxes,  or  liens.  (30a)  
amount   of   any   assessments   or   taxes   which   the   purchaser   may   have    
paid  thereon  after  purchase,  and  interest  on  such  last  named  amount   • Under  Section  28,  Rule  39  of  the  1997  Rules  of  Civil  Procedure,  
at   the   same   rate;   and   if   the   purchaser   be   also   a   creditor   having   a   prior   the   period   of   redemption   shall   be   “at   any   time   within   one   (1)  
lien  to  that  of  the  redemptioner,  other  than  the  judgment  under  which   year  from  the  date  of  registration  of  the  certificate  of  sale,”  so  
such  purchase  was  made,  the  amount  of  such  other  lien,  with  interest.   that   the   period   is   now   to   be   understood   as   composed   of   365  
  days,  unlike  the  360  days  under  the  old  provisions  of  the  Rules  
Property   so   redeemed   may   again   be   redeemed   within   sixty   (60)   days   of  Court.    xYsmael  v.  CA,  318  SCRA  215  (1999).  
after   the   last   redemption   upon   payment   of   the   sum   paid   on   the   last   • In  execution  sales,  the  sheriff  does  not  warrant  the  title  to  the  
redemption,  with  two  per  centum  thereon  in  addition  and  the  amount   property  sold  by  him  and  it  is  not  incumbent  on  him  to  place  the  
of   any   assessments   or   taxes   which   the   last   redemptioner   may   have   purchaser  in  possession  of  the  property.    
paid   thereon   after   redemption   by   him,   with   interest   on   such   last   o The  rule  of  caveat  emptor  applies  to  execution  sales.  
named  amount,  and  in  addition,  the  amount  of  any  liens  held  by  said   • Written  notice  must  be  given  to  the  judgment  debtor  before  the  
last  redemptioner  prior  to  his  own,  with  interest.  The  property  may  be   sale   of   the   property   on   execution,   to   give   him   the   opportunity  
again,  and  as  often  as  a  redemptioner  is  so  disposed,  redeemed  from   to   prevent   the   sale   by   paying   the   judgment   debt   sought   to   be  
any   previous   redemptioner   within   sixty   (60)   days   after   the   last   enforced   and   the   costs   which   have   been   incurred.     xTorres   v.  
redemption,  on  paying  the  sum  paid  on  the  last  previous  redemption,   Cabling,  275  SCRA  329  (1997).  
with   two   per   centum   thereon   in   addition,   and   the   amounts   of   any  

 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
• Where  there  is  a  third-­‐party  claim,  sheriff  should  demand  from   the   redemption   price   when   the   said   judgment   debtor   or  
the   judgment   creditor   who   becomes   the   highest   bidder,   mortgagor  effects  the  redemption.  
payment   in   cash   of   his   bid   instead   of   merely   crediting   the   • The   redemption   of   extra-­‐judicially   foreclosed   properties   is  
amount   to   the   partial   satisfaction   of   the   judgment   debt.     exercised  within  one  (1)  year  from  the  date  of  the  auction  sale  
xTorres  v.  Cabling,  275  SCRA  329  (1997).   as  provided  for  in  Act  3135.  xLee   Chuy   Realty   Corp.   v.   CA,   250  
  SCRA  596  (1995).  
4. Redemption  in  Extrajudicial  Foreclosure  (Sec.  6,  Act  3135)   • The  execution  of  a  dacion  en  pago  by  sellers  effectively  waives  
  the   redemption   period   normally   given   a   mortgagor.   xFirst  
ACT  NO.  3135   Global   Realty   and   Dev.   Corp.   v.   San   Agustin,   377   SCRA   341  
Section  6.   (2002).  
In   all   cases   in   which   an   extrajudicial   sale   is   made   under   the   special    
power  hereinbefore  referred  to,  the  debtor,  his  successors  in  interest   5. Redemption  In  Judicial  Foreclosure  Of  Mortgage  (Sec.  47,  R.A.  
or   any   judicial   creditor   or   judgment   creditor   of   said   debtor,   or   any   8791)  
person   having   a   lien   on   the   property   subsequent   to   the   mortgage   or    
deed  of  trust  under  which  the  property  is  sold,  may  redeem  the  same   REPUBLIC  ACT  NO.  8791  
at   any   time   within   the   term   of   one   year   from   and   after   the   date   of   the   Section  47.  Foreclosure  of  Real  Estate  Mortgage.  
sale;   and   such   redemption   shall   be   governed   by   the   provisions   of   In   the   event   of   foreclosure,   whether   judicially   or   extra-­‐judicially,   of  
sections   four   hundred   and   sixty-­‐four   to   four   hundred   and   sixty-­‐six,   any   mortgage   on   real   estate   which   is   security   for   any   loan   or   other  
inclusive,   of   the   Code   of   Civil   Procedure,   in   so   far   as   these   are   not   credit   accommodation   granted,   the   mortgagor   or   debtor   whose   real  
inconsistent  with  the  provisions  of  this  Act.       property   has   been   sold   for   the   full   or   partial   payment   of   his   obligation  
  shall   have   the   right   within   one   year   after   the   sale   of   the   real   estate,   to  
• This  is  the  General  Rule   redeem   the   property   by   paying   the   amount   due   under   the   mortgage  
• Before   the   expiration   of   the   1-­‐year   redemption   period   within   deed,  with  interest  thereon  at  rate  specified  in  the  mortgage,  and  all  
which   the   judgment-­‐debtor   or   mortgagor   may   redeem   the   the   costs   and   expenses   incurred   by   the   bank   or   institution   from   the  
property,   the   purchaser   thereof   is   not   entitled,   as   a   matter   of   sale  and  custody  of  said  property  less  the  income  derived  therefrom.  
right,  to  the  possession  of  the  subject  matter.   However,   the   purchaser   at   the   auction   sale   concerned   whether   in   a  
• The  Court  may  allow  the  purchaser  to  receive  the  rentals  of  the   judicial  or  extra-­‐judicial  foreclosure  shall  have  the  right  to  enter  upon  
purchased   property,   but   the   purchaser   is   accountable   to   the   and   take   possession   of   such   property   immediately   after   the   date   of  
judgment-­‐debtor  for  that  amount,  and  may  be  credited  against   the   confirmation   of   the   auction   sale   and   administer   the   same   in  

 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
accordance   with   law.     Any   petition   in   court   to   enjoin   or   restrain   the    
conduct   of   foreclosure   proceedings   instituted   pursuant   to   this   Issue:   Whether   or   not   Soriano   may   buy   the   mortgaged   property   of  
provision   shall   be   given   due   course   only   upon   the   filing   by   the   Bautista  
petitioner  of  a  bond  in  an  amount  fixed  by  the  court  conditioned  that    
he  will  pay  all  the  damages  which  the  bank  may  suffer  by  the  enjoining   Held:  YES.  True  that  the  transaction  is  a  mortgage,  which  carried  with  it  
or  the  restraint  of  the  foreclosure  proceeding.   a   customary   right   of   redemption.   However,   the   mortgagor’s   right   to  
  redeem   was   rendered   defeasible   at   the   election   of   the   mortgagees   by  
Notwithstanding   Act   3135,   juridical   persons   whose   property   is   being   virtue  of  Par.  5,  allowing  them  the  option  to  purchase  the  said  lot.  There  
sold   pursuant   to   an   extrajudicial   foreclosure,   shall   have   the   right   to   is   nothing   immoral   or   illegal   about   such   stipulation.   It   was   supported   by  
redeem   the   property   in   accordance   with   this   provision   until,   but   not   the   same   consideration   as   the   mortgage   contract   and   constituted   an  
after,   the   registration   of   the   certificate   of   foreclosure   sale   with   the   irrevocable   continuing   offer   within   the   time   stipulated.   That   being   the  
applicable  Register  of  Deeds  which  in  no  case  shall  be  more  than  three   case,  Bautista  spouses  must  be  compelled  to  honor  the  sale.  
(3)   months   after   foreclosure,   whichever   is   earlier.     Owners   of   property    
that  has  been  sold  in  a  foreclosure  sale  prior  to  the  effectivity  of  this   Doctrine:  
Act  shall  retain  their  redemption  rights  until  their  expiration.    
  • No  right  to  redeem  from  a  judicial  foreclosure  sale,  except  those  
• Section  47(1)  refers  to  foreclosures  by  banking  institutions.     granted  by  banks  or  banking  institutions.  xGSIS  v.  CFI,  175  SCRA  
• Section  47(2)  is  the  Exception  to  Act  3135.   19  (1989).  
• A   stipulation   to   render   the   right   to   redeem   defeasible   by   an   • The   one-­‐year   redemption   period   in   the   case   of   foreclosure   is  
option  to  buy  on  the  part  of  the  creditor.   Soriano  v.  Bautista,  6   not   interrupted   by   the   filing   of   an   action   assailing   the   validity   of  
SCRA  946  (1962).     the  mortgage,  so  that  at  the  expiration  thereof,  the  mortgagee  
  who   acquires   the   property   at   the   foreclosure   sale   can   proceed  
Soriano  v.  Bautista   to  have  title  consolidated  in  his  name  and  a  writ  of  possession  
  issued  in  his  favor.  xUnion  Bank  v.  CAs,  359  SCRA  480  (2001).1  
Facts:   Bautista   spouses   mortgaged   their   lot   to   Soriano,   who   took   • After  bank  has  foreclosed  the  property  as  highest  bidder  in  the  
possession  thereof  and  cultivated  the  same.  Pursuant  to  Par.  5  of  their   auction   sale,   the   accepted   offer   of   spouses-­‐borrowers   to  
agreement,   Soriano   decided   to   buy   the   lot.   Bautista   refused   to   sell   “repurchase”   the   property   was   actually   a   new   option   contract,  
claiming   that   being   mortgagors,   they   cannot   be   deprived   of   their   right  
to  redeem  the  property.   1
 Vaca  v.  CA,  234  SCRA  146  (1994).  
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)  
SALES  REVIEWER  (2013-­‐2014)                            ATTY.  RAY  PAOLO  SANTIAGO  
 
and  the  condition  that  the  spouses-­‐borrowers  will  pay  monthly   Section  12.  Lessee's  Right  of  Redemption    
interest   during   the   one-­‐year   option   period   is   considered   to   be   In   case   the   landholding   is   sold   to   a   third   person   without   the  
the   separate   consideration   to   hold   the   option   contract   valid.   knowledge  of  the  agricultural  lessee,  the  latter  shall  have  the  right  to  
xDijamco  v.  Court  of  Appeals,  440  SCRA  190  (2004).   redeem   the   same   at   a   reasonable   price   and   consideration:   Provided,  
• No   right   to   redeem   is   granted   to   the   debtor-­‐mortgagor   when   That  the  entire  landholding  sold  must  be  redeemed:  Provided,  further,  
there  has  been  a  judicial  foreclosure  of  a  real  estate  mortgage,   That   where   these   are   two   or   more   agricultural   lessees,   each   shall   be  
except  when  the  mortgagee  is  a  bank  or  a  banking  institution.   entitled   to   said   right   of   redemption   only   to   the   extent   of   the   area  
• “Equity   of   Redemption”   "   the   right   of   the   defendant-­‐ actually  cultivated  by  him.  The  right  of  redemption  under  this  Section  
mortgagor  to  extinguish  the  mortgage  and  retain  ownership  of   may   be   exercised   within   two   years   from   the   registration   of   the   sale,  
the   property   by   paying   the   secured   debt   within   90   days   after   and  shall  have  priority  over  any  other  right  of  legal  redemption.  
the  judgment  becomes  final,  or  even  after  the  foreclosure  sale    
but  before  the  confirmation  of  it  by  the  Court.   • Under   Section   12   of   R.A.   3844,   as   amended,   in   the   event   that  
  the  landholding  is  sold  to  a  third  person  without  the  knowledge  
6. Redemption  in  Foreclosure  by  Rural  Banks  (R.A.  No.  720)   of  the  agricultural  lessee,  the  latter  is  granted  by  law  the  right  to  
• If  the  land  is  mortgaged  to  a  rural  bank,  mortgagor  may  redeem   redeem   it   within   180   days   from   notice   in   writing   and   at   a  
within   two   (2)   years   from   the   date   of   foreclosure   or   from   the   reasonable   price   and   consideration.     xQuiño   v.   CA,   291   SCRA  
registration   of   the   sheriff's   certificate   of   sale   at   such   foreclosure   249  (1998).2  
if   the   property   is   not   covered   or   is   covered,   respectively,   by    
Torrens  title.  If  the  mortgagor  fails  to  exercise  such  right,  he  or  
his   heirs   may   still   repurchase   within   five   (5)   years   from  
expiration   of   the   two   (2)   year   redemption   period   pursuant   to  
Sec.  119  of  the  Public  Land  Act  (C.A.  141).  xRural   Bank   of   Davao  
City  v.  CA,  217  SCRA  554  (1993).1  
 
7. Legal  Right  to  Redeem  under  Agrarian  Reform  Code  
 
REPUBLIC  ACT  NO.  3844  

1 2
 Heirs  of  Felicidad  Canque  v.  CA,  275  SCRA  741  (1997).    Springsun  Management  Systems  Corp.  v.  Camerino,  449  SCRA  65  (2005).    
 
NOTES  BY  RACHELLE  ANNE  GUTIERREZ  (UPDATED:  MAY  21,  2014)