Chapter 7: Extinguishment of Sale
apparent easement or servitude.
Causes of Extinguishment of Sale
1. Same causes as all other obligations
(PALOREMECON)
a. Payment or performance of
obligation;
b. Loss of the thing due;
c. Remission of debt of
condonation;
d. Merger of rights or confusion
e. Compensation;
f. Novation;
g. Others
2. Special or those causes which are
recognized by the law on sales
a. Article 1484- right of the seller to
rescind a contract of sale of
personal property by installment
in case the buyer fails to pay 2 or
more installments.
b. Article 1534- special right to
rescind of an unpaid seller
provided that he exercises right
of stoppage in transitu or has
possessory lien.
c. Article 1539- rescission of sale
of real estate at the rate of a
certain price per unit of measure
or number. The rescission here is
based on lack of area or inferior
value of the real property.
d. Article 1542- the buyer is
entitled to rescind in case of sale
of real estate made in lump sum
due to the failure of the seller to
deliver all that is included in the
boundaries.
e. Article 1556- rescission because
of partial eviction in the sale of
goods.
f. Article 1560- there is rescission
available to the buyer if the real
property is burdened with a non-
g. Article 1567- rescission due to
breach of warranty against
hidden defect and warranties as
to quality.
h. Article 1591- rescission due to
fear of loss of immovable and
fear of loss of its price. The fear
must be reasonable and well-
grounded fear.
3. Extra-special or those causes which
are given special discussion by the
Civil Code and these are:
a. Conventional Redemption
b. Legal Redemption
Conventional Redemption- the right which
the vendor reserves to himself, to reacquire
the property sold provided that he returns to
the vendee the price of the sale, the expenses
of the contract, any other legitimate
payments made therefor and the necessary
and useful expenses made on the thing sold,
and fulfills other stipulations which may
have been agreed upon.
Note: It covers both real and personal
property.
Nature of Conventional Redemption
1. It is purely contractual.
2. It is an accidental stipulation.
3. It is a real right when registered.
4. It is potestative.
5. It is a resolutory condition.
6. It is not an obligation but a power or
privilege.
7. It is reserved at the moment of the
perfection of the contract of sale.
8. The person entitled to exercise the
right of redemption is necessarily the
owner of the property sold and not
any third party.
 9. It gives rise to reciprocal obligation. c. Definite period of redemption agreed
upon- the right to redeem must be
Equitable Mortgage- one which lacks
exercised within the period fixed but
proper formalities, form or words, or other
it must not exceed 10 years.
requisites prescribed by law for a mortgage,
d. Period agreed upon exceeds 10
but shows the intention of the parties to
years- the vendor a retro has 10 years
make the property subject of the contract as
from the execution of the contract to
security for a debt and contains nothing
exercise his right of redemption
impossible or contrary to law.
e. Period of redemption not specified-
It is a loan disguised as a sale. the redemption period is 10 years.
f. Final judgement that contract is
Case where the contract shall be pacto de retro- the vendor a retro has
presumed to be an equitable mortgage: 30 days from the date of final
1. The price of the sale in unusually judgement to exercise the right of
inadequate. repurchase.
2. The vendor remains in possession. The period within which to redeem can be
3. The period of redemption is extended provided that the total period
extended after expiration. should not exceed 10 years from the time of
4. The purchaser retains part of the the making of the contract.
purchase price.
5. The vendor binds himself to pay Necessity of judicial order for recording of
taxes on the thing sold and the consolidation of ownership
alleged vendee never declared in his
If real property is involved and the
name for taxation purposes the land
vendor failed to redeem within the period
sold.
agreed upon, the vendee’s title becomes
6. The parties really intended an
irrevocable but the consolidation of
equitable mortgage.
ownership in the vendee shall not be
Pacto de retro sales not favored- sales with recorded in the Registry of Property without
a right to repurchase are not favored, and the a judicial order and until after the vendor has
contract will be construed as a mere loan been duly heard.
unless the court can see that, if enforced
Nature of right to redeem
according to its terms, it is not
unconscionable, oppressive, or unjust.
Period for Exercise of Right of
Redemption
a. No agreement granting right- no
right of redemption
b. Agreement merely grants a right- the
period of redemption shall be 4 years
from the date of the contract
 By virtue of the provision of this
article, it can be concluded that the right to
repurchase is of a real character and should
not be considered personal. Exception is,
however, made to the provisions of the
Mortgage Law and Land Registration Law
with respect to third persons. This means
that the vendor a retro cannot exercise his
right of redemption against a subsequent
transferee for value and in good faith if his
right is not properly registered or annotated.
Subrogation of buyer in the seller’s right
and action
A sale with the right to repurchase
transfers to the buyer all the elements of
ownership subject to a resolutory condition.
This is true even if in the case of real
property, consolidation cannot be registered
without a judicial hearing. But of course, a
seller can only transfer what he has, or if the
seller was not really the owner but only a
usufructuary, the buyer only acquires this
usufructuary right.
Examples of the rights of the seller which
will be transferred to the buyer:
1. Right to mortgage property
2. Right to continue prescription
3. Right to receive fruits
When seller’s creditor can use seller’s right
of redemption
The right to redeem being property,
it is answerable for the debts of the vendor
provided the vendor’s properties are first
exhausted. The exhaustion must be
established to the satisfaction of the vendee
(benefit of excussion). Article 1610 refers to
all kinds of creditors, whether ordinary or
preferred, except those in whose favor exists
a mortgage or antichresis upon the very
property sold recorded prior to the sale.
They need not exhaust. All these latter
creditors have to do is to foreclose their
rights, ignoring the rights of the vendee.
When seller may be required to redeem the
whole property although he had sold only
part thereof
The vendee who acquires the whole
of an undivided immovable a part of which
is subject to a right of repurchase, has right
to demand that the vendor a retro, who likes
to exercise his right of redemption, redeem
the whole property.
Rules when property owned in common is
sold by the co-owners jointly and in the
same contract
a. The co-owners of an undivided
immovable sold by them jointly or
collectively and in the same contract
with the right to repurchase, can
exercise such right only as regards
their respective shares.
b. Similarly, the co-heirs of an
undivided immovable can exercise
the right of redemption only for the
respective portions they have
inherited.
c. The vendee a retro can refuse partial
redemption; he may require all the
vendors or all the heirs to redeem the
entire property or to agree to its
redemption by any one of them. This
right is given to the vendee in line
with the object of the law to put an
end to co-ownerships whenever
possible.
Rule when co-owners sell their shares
separately
 Although it is the policy of the law to
avoid division, it would be unjust, if the sale
was made separately and independently, to
require the co-owners to come to an
agreement with regard to the repurchase of
the thing sold, and certainly, it would be
worse to deprive them of their right in case
they fail to agree. The very purpose of the
article is to prevent such injustice.
Rule if buyer a retro dies, leaving several
heirs
The vendor a retro can exercise the
right to redeem against the heirs of the
vendee a retro with respect only to their
respective shares, whether the thing be
undivided or it has been partitioned among
them. However, if by partition the entire
property has been adjudicated to one of the
heirs, the vendor can exercise the right to
redeem against said heir for the whole.
What seller must give buyer if
redemption is made:
a. The price- this refers to the price
paid to the seller by the buyer, not
the value of the thing at the time of
repurchase. There can of course be a
contrary stipulation that the price to
be returned will be more or less than
the original sum paid by the vendee.
The price tendered must be full;
otherwise, the offer is not effective
unless accepted.
b. Expenses of contract and any other
legitimate payments made by reason
of the sale
c. Necessary and useful expenses made
on the thing sold
Offer to redeem and tender of payment
generally required
The mere declaration of the vendor
of his intention to exercise the right of
repurchase is not sufficient to preserve the
right of redemption. The law requires that
the offer must be a bona fide one and
accompanied by an actual and simultaneous
tender of payment or consignation of the full
amount agreed upon for repurchase.
Rules with respect to fruits
a. This article applies only when the
parties have not provided for any
sharing arrangement with respect to
the fruits existing at the time of
redemption.
b. It refers only to natural and industrial
fruits. Civil fruits are deemed to
accrue daily and belong to the
vendee in that proportion.
c. If there were fruits at the time of the
sale and the vendee paid for them, he
must be reimbursed at the time of
redemption as the payment forms
part of the purchase price.
d. If no indemnity was paid by the
vendee for the fruits, there shall be
no reimbursement existing at the
time of redemption.
e. If the property had no fruits at the
time of the sale and some exist at the
time of redemption, they shall be
apportioned proportionately between
the redemptioner and the vendee,
giving the latter a share in proportion
to the time he possessed the property
during the last year counted from the
anniversary of the date of the sale to
compensate the vendee for his
expense. The same rule, it is
believed, is also applicable if there
were fruits at the time of the sale and
the vendee paid for them.
Right of vendor a retro to recover thing sold
free from charges
The vendee a retro may alienate,
encumber, or perform other acts of
ownership over the thing sold. But his
ownership being revocable upon
redemption, all acts done by him are also
revocable. Thus, he may borrow money and
mortgage the property but when the vendor
a retro redeems, the vendee a retro is obliged
to redeem the mortgage. The vendor has the
right to receive the property in the same
condition in which it was at the time of the
sale.
Legal Redemption- the right to be
subrogated, upon the same terms and
conditions stipulated in the contract, in the
place of one who acquires a thing by
purchase or dation in payment, or by any
other transaction whereby ownership is
transmitted by onerous title.
The right applies to both movable and
immovable property.
It has been held that it cannot take place in
barter and in the transmission of property by
hereditary title. Evidently, the right is not
available where there is only a mortgage or
lease.
Instances of Legal Redemption
a. Article 1088- sale of hereditary
rights, and not to specific properties,
for the payment of the debts of the
decedent’s estate.
b. Article 1620- co-owner’s right of
redemption of portion of co-owned
property sold to third person.
c. Article 1621- right of redemption of
adjoining owners of a piece of rural
land not exceeding one hectare
alienated to third persons.
d. Article 1622- right of adjoining
owners of a small piece of urban
land sold to third persons.
e. Article 1634- right of redemption of
debtor in case of sale of credit or
other incorporeal right in litigation.
f. Section 261, R.A. No. 7160, Local
Government Code- redemption by
owner of real property sold for
delinquent taxes. The period is
within one year from the date of sale.
g. Section 119, Public Land Law,
Commonwealth Act No. 14-
repurchase by homesteader of
homestead sold under the Public
Land Act. The period is five years.
h. Section 28, Rule 39, 1997 Rules of
Civil Procedure, as amended-
redemption by judgment debtor or
redemptioner of real property sold on
execution. The period one year from
the date of the registration of the
certificate of sale.
i. Section 4, Rule 68, 1997 Rule of
Civil Procedure, as amended-
redemption by mortgagor after
mortgaged property has been
judicially foreclosed and sold. The
period is one year from the date of
the registration of the certificate of
sale.
j. Section 6, Act No. 3135, as
amended, An Act to Regulate the
Sale of Property Under Special
Powers Inserted In or Annexed to
Real-Estate Mortgages, March 6,
1924- in all cases of extra-judicial
foreclosure sale, the mortgagor may
redeem the property within one year
from the date of registration of the
sale.
k. Section 12, R.A. No. 3844, code of
Agrarian, as amended- redemption
 by an agricultural lessee of
landholding sold by the landowner.
The period is 180 days from notice
in writing which shall be served by
the vendee on all lessees affected and
the Department of Agrarian Reform
upon the registration of the sale. The
right has priority over any other right
of redemption, like the tight of
redemption of a co-owner under
Article 1620.
Requisites of Right of Legal Redemption
of Co-Owner
a. There must be co-ownership of a
thing.
b. There must be alienation of all or
any of the shares of the other co-
owners.
c. The sale must be to a third person or
stranger.
d. The sale must be before partition
e. The right must be exercised within
30 days from the notice in writing
given by the vendor.
f. The vendee must be reimbursed for
the price of the sale.
Rules of Application
a. A co-owner's right to redeem is
invoked only after the shares of the
other co-owners are sold to a third
person or stranger. Hence, if the
purchaser is also a co-owner, there is
no legal redemption.
b. Should any of the heirs sell his
hereditary right to a stranger before
partition, any or all of the co-heirs
may be subrogated to the rights of
the purchaser by reimbursing him for
the purchase price, provided it be
done within the period of one month
to be counted from the time they
were notified in writing of the sale
by the vendor (Article 1088). Once
the portion corresponding to each
heir is fixed, the co-heirs turn into
co-owners and their right of legal
redemption should be governed by
Articles 1620 and 1623.
c. This right is granted not only to the
original co-owners but applies to all
those who subsequently acquire their
respective shares while the
community subsists.
d. The co-owner who desired to redeem
must tender the entire amount of the
redemption price or validly consign
the same in court. This is needed to
show good faith.
e. The law requires the redemptioner to
pay only a reasonable price if the
price of the alienation is grossly
excessive. The right of the
redemptioner to pay a reasonable
price under Article 1620 does not
excuse him from the duty to make
proper tender of the price that can be
honestly deemed reasonable under
the circumstances, without prejudice
to final arbitration by the courts, nor
does it authorize said redemptioner
to demand that the vendee accept
payment by installments.
When the right is not available
a. A former co-owner has no right to
redeem, because he has lost the
status of co-owner.
b. Co-owners have no right of legal
redemption against each other to
whom the law grants the same
privilege, but only against a third
 person. If there be two buyers of the Rules of application
shares and both are co-owners, one
a. When the land exceeds one (1)
cannot exercise the right against the
hectare, the adjacent owners are not
other.
given the right of legal redemption
c. If a sale is made after partition, the
because this may lead to the creation
right of legal redemption by a co-
of big landed estates.
owner cannot be invoked, there
b. This right may be exercised only
being no more co-ownership.
against a stranger. For the right,
d. The provision covers the case where
however, to be exercised against the
some or one of the co-owners sell(s)
stranger, the stranger must already
their/his share(s) in the property
have rural land (not an adjacent rural
owned in common but not the case
one). The right cannot be exercised
where all the co-owners have sold
against a vendee if he is also an
their shares.
adjacent owner.
Purpose of the grant of right to co-owners c. In case two or more adjacent owners
desire to exercise the right of
The purpose of the law in
redemption, the law gives preference
establishing the right of legal redemption
to the owner of the adjoining land of
between co-owners is to reduce the number
smaller area but if both lands have
of participants until the community is done
the same area, to the one who first
away with, as being a hindrance to the
requested the redemption.
development and better administration of the
property. This reason exists while the Reason and purpose of the law
community subsists and the participants
To foster the development of
continue to be so whether they be the
agricultural areas by adjacent owners who
original co-owners or their successors.
may desire the increase for the improvement
Requisites of right of legal redemption of of their own land.
adjacent owners of rural lands
Requisites of exercise of right of pre-
a. Both the land of the one exercising emption or redemption
the right of redemption and the land
a. The piece of land is urban land.
sought to be redeemed must be rural.
b. The one exercising the right must be
b. The lands must be adjacent.
an adjacent owner.
c. There must be an alienation.
c. The piece of land sold must be so
d. The piece of rural land alienated
small and so situated that a major
must not exceed one hectare.
portion thereof cannot be used for
e. The grantee or vendee must already
any practical purpose within a
own any other rural land.
reasonable time.
f. The rural land sold must not be
d. Such urban land was bought by its
separated by brooks, drains, ravines,
owner merely for speculation.
roads and other apparent servitudes
e. It is about to be resold, or that its
from the adjoining lands.
resale has been perfected.
Rules of application The fundamental policy of the law is
to discourage the keeping for a long time of
a. The price to be paid is reasonable
property in a state of uncertainty, beyond the
price.
thirty-day period, a situation which
b. In case of two or more adjoining
obviously is unjust to the purchaser and
owners desire to exercise the right of
prejudicial to public interest.
legal redemption, the law prefers him
whose intended use of the land
appears best justified. The
determinative factor is the intended
use that appears best justified, and
not whether the land was acquired
for speculative purposes.

Reason and purpose of law

To discourage speculation in real estate
and the consequent aggravation of the
housing problems in centers of population.
Period for exercise of right of redemption
Within 30 days from the notice in
writing by the prospective vendor, or by the
vendor as the case may be. The period is
substantive. The periods given in the law are
conditions precedent, and not periods of
prescription. The offer to exercise the right
of redemption must be within the period
stipulated by the law, for said periods are
requisites for the legal and effective exercise
of the right.
Rules of application
a. Co-owners are preferred over
adjacent owners.
b. When the right of redemption is
exercised (whether it be conventional
or legal redemption) the offer to
redeem must be in legal tender.
c. The period provided in the above
article is absolute. It is pre-emptory
and non-extendible.
Reason for the law