Sales Part 8

• Causes of extinguishment of sale

  • Payment
  • Loss
  • Remission
  • Merger
  • Compensation
  • Innovation
  • Annulment
  • Rescission
  • Resolutory Condition
  • Resolutory Period
  • Prescription
• Causes of extinguishment of sale - Common

  • PaLoReMeCoNo AnRes3Pres
• Causes of extinguishment of sale - Special

  • 1484(Recto Law)
  • 1532()
  • 1539(PUM)
  • 1540(Lump Sum)
  • 1542
  • 1556
  • 1567
  • 1541
• Conventional Redemption (Pacto De Recto)

  There is right to redeem for a certain period and the seller will have to reacquire it otherwise he lose his right and there is consolidation and ownership
• Legal Redemption


  By law
• Conventional Redemption


  Seller reserves the right to redeem
• Synonyms for Conventional Redemption

  • Sale with Right to Repurchase
  • Sale with Right to Redeem
  • Pacto de Recto Sale
  • Rectracto Conventiona
• If there is a doubt whether it's a sale or mortgage

  According to the law its mortgage so that the ownership will not be transferred
• If there is a doubt between absolute sale and mortgage

  It will be construed as a mortgage for that the ownership will not be transferred
• If there is a doubt whether it's a sale with right to repurchase or mortgage

  Mortgage so there would be least transmission of price
• If contract is onerous (sale), interpreted in favor of greatest reciprocity of interest
• Equitable Mortgage - the parties agreed but under 1600 an equitable mortgage the party still agree but because of the intention of the parties the law declares it to be an equitable mortgage; the law declares it not the parties
• The contract shall be presumed to be an EQUITABLE MORTGAGE (1602)
• Indicators that a contract is an Equitable Mortgage, not a Pacto de Recto Sale

  • Unusually Inadequate Consideration
  • Seller remains in possession
  • Extending the period of redemption
  • Buyer retains a part of the price
  • Seller binds himself to pay taxes
  • Other cases
• If there is a doubt the better interpretation between pacto de recto and mortgage is mortgage
• Remedy of Reformation (1605)


  Suppose there is a doubt what is stated in the instrument is sale but it is a sale or a mortgage, the remedy given by those is reformation. Suppose the parties agreed sale but it is mortgage, what is the remedy? Reformation to correct the instrument so that it will express the true intention of the practice
• Period to exercise right of redemption (1606)


  General Rule - period agreed upon

  Exception - if no agreement- 4 years

  Maximum period - 10 years
• If court declares that it is not equitable mortgage but SRR -within 30 days from the time the final judgement was rendered
• The period to redeem the moment it reaches that period it's automatic it cannot be extended by the parties if the party is extended it's not pacto de recto it is unequitable mortgage so that period is automatic
• For consolidation it's not necessary, for recording it is necessary
• Right to Redeem (1608)


  This law applies only for unregistered land because if registered land, what is applicable is the Torrance title system in other words whoever is the registered owner is the owner
• Can buyer a retro sell the property acquired? Yes, because being an owner in this case that is one of the rights given to the buyer
• If the buyer retro sold it to 3rd person, the seller retro will redeem it from the subsequent buyer
• Vendee, subrogated to vendor's rights (1609)

  Being the owner impacted retro if there is intrusion on the property. All the rights are transferred to the buyer retro except only the right to redeem in other words the buyer retro can protect the property he can prevent the intrusion, he can file the necessary case in court being the owner of the property for the period agreed upon
• Generally the right to redeem should belong to the seller himself
• Redemption in sale of part of undivided immovable (1611)

  Only the seller who sold the 1/3 share can redeem up to the extent of 1/3, the other co-owners cannot redeem. The buyer can force the seller to redeem the whole property to avoid co-ownership.
• The buyer can sell or mortgage the property bought
• Right of vendor a retro to recover the thing sold free from charges (1618)

  When the seller redeems the property, the buyer should free the property from any charges or encumbrances placed on it. The buyer, not the seller, is responsible for paying any mortgage on the property.
• Redemption in joint sale by co-owners/ co-heirs of undivided immovable (1612/1613)

  If the co-owners/co-heirs sold their respective 1/3 shares in the same contract, each can only redeem their 1/3 share. The buyer can force them to redeem the whole property to avoid co-ownership.
• Redemption in SEPARATE sales by co-owners/ co- heirs of undivided immovable (1614)


  If the co-owners/co-heirs sold their respective shares in separate contracts, each can only redeem their own share. The buyer cannot force them to redeem the whole property.
• Pacto de retro sale

  A sale with a right of redemption
• In the first paragraph, the ownership is already there and A sold the immovable to Pedro by virtue of pacto de retro sale
• In the second paragraph, A sold the land the immovable to Pedro by pacto de retro, but A died leaving several heirs A1, A2, A3, resulting in co-ownership
• Redemption


  The right to buy back the property on the same terms and conditions as the original sale
• In the first paragraph

  Only 1/3
• In the second paragraph

  A1 can redeem 1/3, A2 can redeem 1/3, A3 can redeem 1/3
• No, in both cases
• Yes, in both cases, because the law discourages co-ownership
• In the first paragraph, the shares were sold in the same contract in 1612
• In the second paragraph, the shares were sold in separate contracts in 1614