CHAPTER 6: ACTIONS FOR BREACH OF CONTRACT OF SALE OF

GOODS
Art. 1594. Actions for breach of the contract of sale of goods shall be
governed particularly by the provisions of this Chapter, and as to matters not
specifically provided for herein, by other applicable provisions of this Title.
Note: This chapter is not applicable to sale of real property.
SPECIFIC PERFORMANCE - is a remedy that can be sought in case of a
breach of contract in the proper court. This is even applicable in cases
brought against municipal corporations to compel payment of the price
agreed upon in a contract, the reason being that a contractual obligation is not
a duty specifically enjoined upon a party by law resulting from office, trust,
or station.
Art. 1595. Where, under a contract of sale, the ownership of the goods has
passed to the buyer and he wrongfully neglects or refuses to pay for the goods
according to the terms of the contract of sale, the seller may maintain an
action against him for the price of the goods.
Where, under a contract of sale, the price is payable on a certain day,
irrespective of delivery or of transfer of title and the buyer wrongfully
neglects or refuses to pay such price, the seller may maintain an action for the
price although the ownership in the goods has not passed. But it shall be a
defense to such an action that the seller at any time before the judgment in
such action has manifested an inability to perform the contract of sale on his
part or an intention not to perform it.
Although the ownership in the goods has not passed, if they cannot
readily be resold for a reasonable price, and if the provisions of article 1596,
fourth paragraph, are not applicable, the seller may offer to deliver the goods
to the buyer, and, if the buyer refuses to receive them, may notify the buyer
that the goods are thereafter held by the seller as bailee for the buyer.
Thereafter the seller may treat the goods as the buyer's and may maintain an
action for the price
Example: Art. 1595 (1) Machines are sold and delivered to the buyer, if the
buyer refuses to pay, the seller may sue for the price.
Example: Art. 1595 (2) The seller and buyer agreed that payment would be
made on Jul. 15, although the goods would be delivered only on Jul. 30. On

Jul. 15, the seller may sue for the price. The buyer is allowed to refuse to pay
if before the judgment in such action, he is able to prove that the seller has no
intention anyway of delivering the goods on Jul. 30. In one case, our Supreme
Court has held that the seller should, upon his election to enforce fulfi llment
against the buyer, indicate in his complaint his readiness to surrender the
goods into the custody of the court and to request the court, if it should deem
such course to be warranted, convenient, and advisable, to direct that the
goods be delivered to its own offi cer or to a receiver to be appointed for the
purpose (unless, of course, a later delivery date has been stipulated). In this
way, the court would be placed in a position to act at once, if the situation
should so require. Furthermore, in this case the adverse party is given a fair
opportunity to protect his own interest. (Matute v. Cheong Boo, 37 Phil. 372).
Example: Art. 1595 (3) Seller and buyer agreed that payment and delivery
would be made on July 15. On said date, seller may offer to deliver the goods
to the buyer, and if buyer refuses to receive the goods, the seller can tell the
buyer, I am holding the goods, no longer as the seller, but as your depositary.
You are now the owner of the goods. The seller can now maintain an action
for the price. This can be done if:
(1) The goods cannot readily be resold for a reasonable price
(2) If the provisions of Art. 1596, par. 4 are not applicable
Art. 1596. Where the buyer wrongfully neglects or refuses to accept and pay
for the goods, the seller may maintain an action against him for damages for
non-acceptance.
The measure of damages is the estimated loss directly and naturally
resulting in the ordinary course of events from the buyers breach of contract.
Where there is an available market for the goods in question, the
measure of damages is, in the absence of special circumstances showing
proximate damage of a different amount, the difference between the contract
price and the market or current price at the time or times when the goods
ought to have been accepted, or, if no time was fixed for acceptance, then at
the time of the refusal to accept.
If, while labor or expense of material amount is necessary on the part of
the seller to enable him to fulfill his obligations under the contract of sale, the
buyer repudiates the contract or notifies the seller to proceed no further
therewith, the buyer shall be liable to the seller for labor performed or
expenses made before receiving notice of the buyers repudiation or
countermand. The profit the seller would have made if the contract or the sale
had been fully performed shall be considered in awarding the damages.

COMMENTS:
Remedy of Seller if Buyer Refuses to Accept and Pay
Example of paragraph 1: S sold B a piano. If B wrongfully refuses to accept
and pay for the goods, S may bring an action against him for damages for
non-acceptance.
Measure of Damages
The estimated loss directly and naturally resulting in the ordinary course of
events from the buyers breach of contract. (Art. 1596, par. 2 and Suilong and
Co. v. Manyo Shaji Kaisha, 42 Phil. 722).
What action or actions are available to the seller of the goods in case the
buyer wrongfully refuses to accept the goods sold?
ANS.: (a) Maintain an action for damages because of the non- acceptance.
(Art. 1596).
(b) Hold the goods as bailee for the buyer and bring an action for the price.
(See Art. 1595, 3rd paragraph).
(c) Ask for the resolution of the contract for failure of the buyer to fulfill his
obligations.
Art. 1597. Where the goods have not been delivered to the buyer, and the
buyer has repudiated the contract of sale, or has manifested his inability to
perform his obligations thereunder, or has committed a breach thereof, the
seller may totally rescind the contract of sale by giving notice of his election
so to do to the buyer.
COMMENT:
When Seller May Totally Rescind the Contract of Sale
(a) This Article which deals with the instances when the seller may totally
rescind the contract of sale, applies only if the goods have not yet been
delivered.
(b) The automatic rescission here requires notice thereof to the buyer.
Art. 1598. Where the seller has broken a contract to deliver specific or
ascertained goods, a court may, on the application of the buyer, direct that the
contract shall be performed specifically, without giving the seller the option
of retaining the goods on payment of damages. The judgment or decree may
be unconditional, or upon such terms and conditions as to damages, payment
of the price and otherwise, as the court may deem just.

COMMENT:
Rule When Seller Has Broken a Contract to Deliver Specific or
Ascertained Goods
(a) Observe that here the seller is guilty; hence, there is no right of retention
on his part even if said seller is willing to pay damages.
(b) Note that there must be an order from the court for the specifi c
performance.
(c) Note further that the court may make the order on the application of the
buyer.
Art. 1599. Where there is a breach of warranty by the seller, the buyer may,
at his election:
(1) Accept or keep the goods and set up against the seller, the breach of
warranty by way of recoupment in diminution or extinction of the price;
(2) Accept or keep the goods and maintain an action against the seller for
damages for the breach of warranty;
(3) Refuse to accept the goods, and maintain an action against the seller for
damages for the breach of warranty;
(4) Rescind the contract of sale and refuse to receive the goods or if the
goods have already been received, return them or offer to return them to the
seller and recover the price or any part thereof which has been paid.
When the buyer has claimed and been granted a remedy in anyone of
these ways, no other remedy can thereafter be granted, without prejudice to
the provisions of the second paragraph of Article 1191.
Where the goods have been delivered to the buyer, he cannot rescind the
sale if he knew of the breach of warranty when he accepted the goods without
protest, or if he fails to notify the seller within a reasonable time of the
election to rescind, or if he fails to return or to offer to return the goods to the
seller in substantially as good condition as they were in at the time the
ownership was transferred to the buyer. But if deterioration or injury of the
goods is due to the breach of warranty, such deterioration or injury shall not
prevent the buyer from returning or offering to return the goods of the seller
and rescinding the sale.
Where the buyer is entitled to rescind the sale and elects to do so, he
shall cease to be liable for the price upon returning or offering to return the
goods. If the price or any part thereof has already been paid, the seller shall
be liable to repay so much thereof as has been paid, concurrently with the
return of the goods, or immediately after an offer to return the goods in
exchange for repayment of the price.
Where the buyer is entitled to rescind the sale and elects to do so, if the

seller refuses to accept an offer of the buyer to return the goods, the buyer
shall thereafter be deemed to hold the goods as bailee for the seller, but
subject to a lien to secure payment of any portion of the price which has been
paid, and with the remedies for the enforcement of such lien allowed to an
unpaid seller by Article 1526.

Effect if Buyer Still Accepted the Goods Despite His Knowledge of the
Breach of the Warranty
The 3rd paragraph of the Article gives the effect generally, NO
RESCISSION.
CHAPTER 7: EXINGUISHMENT OF SALE

(5) In the case of breach of warranty of quality, such loss, in the absence of
special circumstances showing proximate damage of a greater amount, is the
difference between the value of the goods at the time of delivery to the buyer
and the value they would have had if they had answered to the warranty.
COMMENT:
Remedies of the Buyer if Seller Commits a Breach of Warranty
The first paragraph of the Article enumerates the FOUR REMEDIES of the
buyer, which are:
1. Accept or keep the goods and set up against the seller, the breach of
warranty by way of recoupment in diminution or extinction of the price;
2. Accept or keep the goods and maintain an action against the seller for
damages for the breach of warranty;
3. Refuse to accept the goods, and maintain an action against the seller for
damages for the breach of warranty;
4. Rescind the contract of sale and refuse to receive the goods or if the goods
have already been received, return them or offer to return them to the seller
and recover the price or any part thereof which has been paid.
Effect if Buyer Selects Any of the Four Remedies Given
If the buyer has selected any of the remedies, and has been GRANTED the
same, no other remedy can be given. However, the second paragraph of Art.
1191 will still apply.
Article 1191 provides: The power to rescind obligations is implied in
reciprocal ones in case one of the obligors should not comply with what is
incumbent upon him. The injured party may choose between the fulfillment
and the rescission of the obligation, with the payment of damages in either
case. He may also seek rescission, even after he has chosen fulfillment, if the
latter should become impossible. The court shall decree the rescission
claimed, unless there be just cause authorizing the fixing of a period. This is
understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with Articles 1385 and 1388 and the
Mortgage Law.

How is sale extinguished?

-Art. 1600. Sales is extinguished, generally, by:
a. The same causes as all other obligations
b. Conventional or legal redemption.
-Under Art. 1231 of the NCC, obligations are extinguished by:
a. Payment/performance
b. Loss of the thing due
c. Condonation or remission of debt
d. Confusion or merger of the rights of the creditor and debtor
e. Compensation
f. Novation
g. Resolutory condition fulfilled
Does Art. 1600 apply to both consummated and merely perfected
contracts?
-Yes, Art. 1600, which is the provision on the extinguishment of sale
conventional or legal redemption or y same causes as all other obligations,
applies to both consummated and merely perfected contracts because the law
does not distinguish.
Can a claim for damages due to breach of contract be an independent
action?
-No, the claim for damages due to breach of contract is considered a right to
every action for the fulfillment of the obligation. If the damages are not
sought in the action to compel performance, ti cannot be recovered in an
independent action.
When can a contract of sale be regarded as having been novated?
-For a contract of sale to be regarded as having been novated, a new contract
has to exist between the buyer and the seller.
(Bert Osmena vs CA)

When will CONVENTIONAL REDEMPTION take place?

-Art. 1601. It will take place when the vendor reserves the right to repurchase
the thing sold, with the obligation to comply with the provisions of Art. 1616
and other stipulations which may have been agreed. In other words,
Conventional Redemption can only take place if it is stipulated in the contract
of sale. Conventional Redemption is also called the right to redeem.
NOTE: If the terms of the pacto de retro or sale with a right to repurchase are
clear and the contract is not assailed as false nor its authenticity challenged,
the literal sense of its terms shall be given effect.
If the Vendor fails to comply with the provisions of Art. 1616 in
exercising his right to repurchase, what will happen to the property if it
is a real property?
-Art. 1607. In case of real property, the consolidation of ownership in the
vendee by virtue of the failure of the vendor to comply with the provisions of
Art. 1616, shall not be recorded in the Registry of Property without a judicial
order, after the vendor has been duly heard.
NOTE: The judicial hearing contemplated by Art. 1607 refers not to the
consolidation of ownership, but to the registration of the consolidation.
Is the judicial order necessary for the consolidation itself?
-Art. 1607. No, because the ownership is consolidated by mere operation of
law upon failure of the seller to fulfill what is prescribed under Art. 1616 for
redemption, the vendee shall irrevocabley acquire the ownership of the thing
sold, and the vendor loses his rights over the property. The requirement in Art.
1607 for a judicial order is merely for purposes of registering the
consolidation of the title.
Can the Vendor avail himself of the right repurchase without returning
to the Vendee the price of the sale?
-Art. 1616. No, the Vendor cannot avail himself of the right of repurchase if
he does not return to the vendee the price of the sale, in addition, he also has
to return the:
a. Expenses of the contract and any other legitimate payments made by
reason of the sale
b. The necessary and useful expenses made on the thing sold.

Assuming the requisites of Art. 1616 are complied with, what is the effect
of registration?
-Proper registration of the contract of sale with right to repurchase is notice to
all those dealing with the property of the character of the agreement entered
into by the parties and duly recorded.
Can the inadequacy of the price in a sale with a right of repurchase be a
ground for rescinding the contract?
-No, the inadequacy of the price cannot be considered a ground for rescinding
the contract as the practice is to fix a relatively reduced price in order that the
vendor a retro may be able to redeem the object of the said sale.
What is equitable mortgage?
-Equitable mortgage is one w/c reveals the intention of the parties to charge a
real property as security for debt, and contains nothing impossible or contrary
to law.
When can a contract of sale be presumed to be an equitable mortgage?
-Art. 1602. A contract shall be presumed to be an equitable mortgage when:
a. Price of a sale w/a right to repurchase is inadequate
b. Vendor remains in possession as lessee or otherwise
c. Another instrument extending the period of redemption or granting a new
period is executed upon or after expiration of right to repurchase
d.Purchaser retains a part of the purchase price for himself
e.Vendor binds himself to pay the taxes of the thing sold
f.Any other case where the real intention of the parties is that the transaction
shall secure the payment of a debt/performance of any other obligation
In a contract of sale with a right to repurchase, it was agreed that after
the period fixed for the repurchase, the buyer would not become the
owner, instead a new pacto de retro shall be issued. What is the effect of
this stipulation on the contract?
-According to Art. 1602(c), the contract will be presumed to be an equitable
mortgage if the contract of sale with a right to repurchase has a stipulation
providing for the renewal of the right to repurchase after the period fixes for
the repurchase.

If the buyer a retro has been given the right to enjoy the usufruct of the
land during the period of redemption, what is the effect of such
stipulation on the contract?
-Usufruct is an element which is involved in a contract of sale, therefore, if
the buyer a retro has been given the right to enjoy the usufruct of the land
during the period of redemption, it is cannot be considered an equitable
mortgage, but a sale with a right to repurchase.
Problem:
Spouses Villarica sold to spouses Consunji a parcel of land for P35,000 in
Davao and executed an absolute sale on May 19, 1951. On May 25, 1951, the
buyers, spouses Consunji, executed another instrument granting the sellers,
spouses Villarica, an option to buy the same property within the period of 1
year. In 1953, the Consunji spouses sold the property to another person for
P47,000.00. As result, spouses Villarica sued spouses Consunji and the other
buyer for
the reformation of the instrument of absolute sale into an
equitable mortgage as a security for a loan. The spouses Villarica alleged that
since the option to buy was extended for 1 month, Art. 1602 should be
applied, therefore, there is a presumption that an equitable mortgage was the
true agreement arrived at.
Issue: Should the deed of absolute sale be reformed?
Held: No, the deed of absolute sale should not be reformed. Although an
extension of the period within which to redeem gives rise to the presumption
that an equitable mortgage was really intended. However, in this case, there
was no sale a retro but only an option to buy which was executed on May 25,
1951. The right of repurchase is not a right granted to the seller by the buyer
in a subsequent instrument, but is a right reserved by the vendor in the same
instrument of sale as one of the stipulations in the contract.

If a contract purporting to be a right to repurchase is doubtful, how shall

it be construed?
-Art. 1603. In case of doubt, a contract purporting to be a sale with a right to
repurchase shall be construed as an equitable mortgage.
In a contract purporting to be a contract of absolute sale, what
provisions will apply?
-Art. 1604. To a contract purporting to be a contract of absolute sale, the
provisions of Art. 1602 shall apply. Hence, it shall still be construed as an
equitable mortgage.
Art. 1602, where a sale with a right to repurchase is considered an
equitable mortgage since the elements under said article are present in
the contract, and Art. 1604, where a contract purporting to be an
absolute sale is construed as an equitable mortgage, both indicate that
the intention of the parties to make it a contract of sale with a right to
repurchase is absent. How can parties remedy this?
-Art. 1605. In the cases referred to in Art. 1602 and 1604, the apparent
vendor may ask for the reformation of the instrument, to correct the
instrument so as to make it express the true intent of the parties.
When can a a right to repurchase be exercised when it is not specifically
agreed upon, or there is no express agreement of such?
-Art. 1606 (1). The right to repurchase in the absence of an express
agreement shall last 4years from the date of the contract.

Once the instrument of absolute sale is executed, the seller can no longer
reserve the right to repurchase or grant it in a separate instrument.
(Angel Villarica, et al. v CA, et al. L-19196, Nov. 29, 1968)

NOTE: So long as the period to repurchase is not fixed by the parties, said
period to be counted from the date of the contract is 4 years.
Examples indicating no specific period to repurchase:
1. Vendor is entitled to repurchase when he has established a certain business.
2. Right cant be exercised w/in 3yrs from the date of the contract.
-Here there is no time agreement, so only 4yrs. From the time it could be
exercised. Right can be exercised after the 3rd year but before the expiration
of the 7th year.

NOTE: If a seller has been granted merely an option to buy within a certain
period, and the price paid by the buyer was adequate-the sale is absolute, and
cannot be construed and presumed as an equitable mortgage, even if the
period within which to exercise the option is extended.

If there is an express agreement or a specific period agreed upon to the

right to repurchase, how long can it be exercised or will it last?
-Art. 1606 (2). The right to repurchase expressly agreed upon by the parties
cannot exceed 10years

Examples of periods contemplating the right to be exercised w/in

10years:
a. At anytime they have money
b. When he has the means
c. In March of any year
d. Not before 5yrs nor after 8yrs
Why does the law limit the period of redemption?
-In the case of Yadao vs Yadao, the Court held that the law does not favor
suspended ownership.
When can a seller of a contract with a right to repurchase be considered
a delinquent when the contract has no express agreement?
-In a case where no express agreement is specified, a seller with a right to
repurchase is given 4years to exercise such right. If that 4year period has not
yet expired, the seller cannot be considered a delinquent as it is erroneous to
vest title of the property outright to the buyer.
Can the period of redemption be extended after the original period has
expired?
-The Court had two conflicting answers to this question. In the case of Umale
vs Fernandez, the Court held that it was okay so long as the total period,
meaning the original period and the extended period, does not exceed 10years
from the time the contract was made. However, in the case of Ramos vs
Icasiano, the Court held that the right to redeem must exist at the time of the
sale, and not afterwards.
What if the period agreed exceeds 10years? What effect does it have on
the sale with a right to repurchase?
-The Court held in Monteiro vs Salgado, that the period in excess of 10yrs is
void, but this nullity of the period specified to exercise the right to repurchase
does not affect the validity of the sale as said stipulation is merely an
accidental element to the sale and may or may not be adopted at will by the
parties. (Alejado vs Lim Siongco).
If the period given is beyond 10years, the right to redeem still exists during
the first 10years. It would be an error to hold that the sale is an absolute one
because it is only the period that is considered modified, the sale still remains
a sale with a right to repurchase.

If there is an action pending in court regarding the validity of a sale with

pacto de retro and the action was brought in good faith, what effect does
this action have on the term of the right of redemption?
-The pendency of a case brought in good faith in court tolls the term for the
right to redemption.
Can a vendor still exercise the right to repurchase from the time final
judgment is rendered?
-Art. 1606 (3). Yes, the vendor may still exercise the right to repurchase
within 30days from the time final judgment was rendered in a civil action on
the basis that the contract was a true sale with right to repurchase. In other
words, the court has to decide first by a final judgment that the contract is one
of a pacto de retro and not a mortgage in order for the vendor to exercise the
privilege of repurchasing it within the 30day period provided for by Art. 1606
(3). That said as well, the case given final judgment, must therefore be one
involving a transaction where one of the parties contests or denies that the
true agreement is one of sale with right of repurchase.
S sold B with right to repurchase. B sold the thing to T. In the second
contract, no mention was made of the right to repurchase. Cans S
proceed against T?
-Art. 1608. Yes, the vendor may bring his action against every possessor
whose right is derived from the vendee, even if in the second contract no
mention should have been made of the right to repurchase, without prejudice
to the provisions of the Mortgage Law and the Land Registration Law with
respect to 3rd persons. In the problem, T had bought the thing from B knowing
of the right held by S to repurchase the property, T cannot claim the rights of
an innocent 3rd person.
Art. 1609. The vendee is subrogated to the vendors rights and actions.
-means that a sale with a right to repurchase transfers to the buyer all the
elements of ownership subject to a resolutory condition. 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.
What are examples of rights of Vendor transferred to the Vendee?
1. Right to mortgage the property
2. Right to continue prescription
3. Right to receive fruits

Who can exercise or reserve the right to repurchase in a pacto de retro

contract?
1. vendor
2. His heirs, assigns, or agents
3. Creditor,only if he has already exhausted the vendors property (Art. 1610)
Note: This is not applicable to all creditors. Creditors like prior mortgagees &
creditors in antichresis of the property sold need not exhaust first.
4. Co-owners of an immovable
Note: If co-owners sold their interests to the same person, they may only
redeem their respective shares (Art. 1612)
-Vendee cannot be compelled to agree to partial redemption
-If the co-owners sold their interest to the same person who previously
bought the share of a co-owner subject to a right of redemption, then the latter
may be compelled to redeem the whole property. (Art. 1611)
S sold to B with pacto de retro. S has unpaid creditors. Can the creditors
exercise Ss right of redemption?
-Yes, but only if Ss properties have first been exhausted, which means
creditors first have to proceed against the properties of S before exercising Ss
right of redemption.
Suppose S the vendor a retro agrees to give the property repurchased or
allows the creditors exercise of right of redemption, what effect will this
have in Ss debt?
-If S allows his creditors to exercise the right of redemption, this would
merely be a case of dacion en pago or dation in payment wherein the creditors
acquire the right to satisfy their credits out of the proceeds, NOT THE
PROPERTY THEY REPURCHASED, as consequence of the exercise of the
right of redemption against S.
When may a seller be required to redeem the whole property although he
only sold part thereof?
Art. 1611. In a sale with a right to repurchase, the vendee of a part of an
undivided immovable who acquires it in whole thereof in the case of Art. 498,
may compel the vendor to redeem the whole property, if the vendor wishes to
make use of the right of redemption.
Note: Art. 498. Whenever the thing is essentially indivisible and the
co-owners cannot agree that it be allotted to one of them who shall indemnify
the others, it shall be sold and its proceeds distributed.

A and S are co-owners of a house. S sold his share to B with the right to
repurchase. Later, there was partition, but since the house is essentially
indivisible, and since A and S could not agree as to who should get it, the
house was sold to B and the proceeds divided between A and S. If S wants
to make use of his right to redemption, can B compel him to redeem the
whole house?
-Yes, as provided for by Art. 1611 of the NCC. If S wishes to make use of the
right of redemption over the house which is an example of and indivisible
property, then B can compel S to buy the whole house from him. Without Art.
1611, S would only be allowed to repurchase only half of the property which
would again result in co-ownership, which is not looked upon favorably by
the law.
A, B, and C jointly and in the same contract sold an undivided piece of
land with the right to repurchase. The buyer a retro was X. Prior to the
expiration of the period of redemption, A wanted to repurchase the whole
land. X refused, alleging that A was entitled merely to repurchase As
share. Is X correct?
-Yes, X is correct by virtue of Ar.t 1612, when property owned in common is
sold by the co-owners jointly and in the same contract, none of the co-owners
will be allowed to exercise the right to redeem for more than his respective
share.
Can X be compelled to consent to a partial redemption provided for
under Art. 1612?
-Yes, under Art. 1613, X has the right to refuse A from redeeming As share.
X may ask that A, B, and C agree to redeem the whole thing. If they fail to do
so, X cannot be compelled to consent to a partial redemption. Art. 1613
provides that the vendee may demand all the vendors or co-heirs that they
come to an agreement upon the repurchase of the whole thing sold, and
should they fail to do so, the vendee cannot be compelled to consent to a
partial redemption. Note that Art. 1612 is just one of Xs options.
A, B and C are the co-owners of an undivided house. A sold with right to
repurchase his share to X. Later, X acquires Bs and Cs rights. Now A
wants to redeem his share. X refuses and asks A to redeem the whole
property. Is A allowed to redeem only his share?
-Yes, under Art. 1614, each one of the co-owners of an undivided immovable
who may have sold his share separately, may independently exercise the right
of repurchase as regards his own share, and the vendee cannot compel him to

redeem the whole property. Notice that the rights of the owners of the house
were sold on three separate occasions and NOT JOINTLY AND IN THE
SAME CONTRACT, hence Art. 1614 applies.
F sold a piece of land to B with pacto de retro. B dies leaving C, D, and E
as heirs. F brought an action for redemption against C. Can C be
compelled to resell the whole property?
-By virtue of Art. 1615, C can be compelled to sell his share only whether the
land be undivided or already partitioned among C, D and E. If the inheritance
has already been divided, and the land sold has been awarded to C, then F can
institute an action for redemption against C for the whole land.
Art. 1615. provides that if the seller/vendee should leave several heirs, the
action for the redemption cannot be brought against each of them except for
his own share, whether the thing be undivided, or it has been partitioned
among them.
But if the inheritance has been divided, and the thing sold has been awarded
to one of the heirs, the action for redemption may be instituted against him
for the whole.
What must a seller give a buyer if redemption is made?
-If the seller wants to redeem the object of pacto de retro contract, by virtue
of Art. 1616, the seller must give:
1. The price of the sale
Note: Price of the sale refers to the price paid to the seller by the buyer at the
time of the purchase, NOT THE VALUE of the thing at the time of
repurchase, unless of course there is a contrary stipulation.
2. Expenses of the contract
Note: Generally, the expenses for the execution and registration of a sale will
be borne by the vendor, but if said expenses were paid by the buyer a retro, it
must be reimbursed.
3. Other legitimate payments made by reason of the sale
4. Necessary expenses made on the thing sold
5. Useful expenses made on the thing sold
Note: For necessary and useful expenses, the vendor a retro CANNOT
REQUIRE the vendee a retro to remove the useful improvements on the land
subject of the sale a retro. Under Art. 1616, the vendor a retro must pay for
the useful improvements introduced by the vendee a retro, otherwise the
vendee a retro may retain possession of the land until reimbursement is made.

Are land taxes considered expenses on the property?

-No, In the case of Cabigao vs Valencia, the Court held that the buyer a retro
is not entitled to reimburse payment for land taxes because these taxes are not
considered expenses on the property.
The wife during the marriage sold under pacto de retro her paraphernal
property consisting of a house and lot. A few weeks later, she died. The
husband thereupon repurchased the property with his exclusive capital.
To whom will the property belong, to the huband or to the heirs of the
wife?
-The property will belong to the heirs of the wife, which consequently
includes the husband. At the time of the sale, the property was paraphernal in
nature, therefore, the husbands redemption or repurchase must be deemed as
having revested its ownership in the heirs of the wife, subjec to a lien in favor
of the husband for the amount paid out with his exclusive capital. The nature
of the property repurchased is not determined by the nature of the money
used to repurchase it, but by the nature of the ownership of the right of
redemption.
S sold B land with pacto de retro. At the time of sale, there were growing
fruits. B did not pay any indemnity for said fruits. At redemption, is S
obliged to pay indemnity for fruits growing at said time of redemption?
-No, According to Art. 1617, if at the time of the execution of the sale thre
should be on land, visible or growing fruits, there shall be no reimbursement
for or prorating of those existing at the time of redemption, if no indemnity
was paid by the purchaser when the sale was executed.
Should there have been no fruits at the time of the sale, and some exist at the
time of redemption, they shall be prorated between the redemptioner and the
vendee, giving the latter the part corresponding to the time he possessed the
land in the last year, counted from the anniversary of the date of the sale.
Art. 1618. The vendor who recovers the thing sold shall receive it free from
all charges or mortgages constituted by the vendee, but he shall respect the
leases which the latter may have executed in good faith, and in accordance
with the custom of the place where the land is situated.
Note: This included leases which are registered and those which are not.
However, they must be executed in good faith and in accordance with local
customs. If the buyer a retro retains the property leased, although a
redemption has been made, he shall be liable for damages such as rentals for
the continued use of the property.

May the buyer a retro mortgage the property?

-Yes, because according to Art. 1618, he acquires the right of the vendor, but
when the thing is redeemed, the buyer must first free it from mortgage.
Define LEGAL REDEMPTION.
-Art. 1619. Legal Redemption is 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 purchaser or dation in payment, or by any other
transaction whereby ownership is transmitted by onerous title.
When can legal redemption be exercised against a transferee?
-Under Art. 1619, legal redemption can be exercised against a transferee who
gets the property because of purchase, dation in payment, or any other
transaction where ownership is transmitted by onerous title. Therefore, it
cannot apply to barter, transfer by gratuitous title or hereditary succession.

What is the basis of legal redemption?

-Legal redemption is a right predicated on bare statutory privilege to be
exercised only by the persons named in the statute. Thus, the law does not
make actual ownership at the time of redemption a condition precedent, the
right following the person, and not the land. (Magno vs Viola, 61 Phil. 803)
Note: Legal redemption can be effected against either movable or
immovable property. (Manresa)
When can a buyer at a sheriffs sale of real property be entitled to the
rents and profits of the property legally possessed through the sale?
-A buyer at a sheriffs sale or auction of real property is entitled to the rents
and profits of the property after the expiration of the period of redemption
when the legal title to the land has become vested in him. Hence, he is not
entitled to the rents and profits that have accrued before the expiration of the
period of redemption.

What are examples of Legal Redemption?

Who
Art. 1088 Heirs

What
Selling his hereditary
rights to a stranger

Art. 1620 Co-owner

Shares of all the

co-owners or any of
them are sold to a 3rd
person

Art. 1621 Owners of

Adjoining Lands

Piece of rural land

not exceeding 1
hectare

When
Within 30days from
the time they were
notified in writing of
the sale of the vendor

Note: not applicable

to adjacent lands
separated by apparent
servitudes

How
Reimbursing the
purchaser for the
price of the sale
>Redemptioner shall
pay only a reasonable
price if the price of
the alienation is
grossly excessive.
>Should 2 or more
co-owners exercise
the right of
redemption, they may
only do so in
proportion to their
share in the thing
owned in common
If 2 or more
adjoining owners
exercise the right of
redemption at the
same time: owner of
smaller area is
preferred, both
lands same area,1
first requesting is
preferred

Is a delinquent tax payer entitled to recover fruits that accrued prior to

the redemption of the property?
-No, a delinquent payer whose property is sold by the government is not
entitled to recover the fruits that had accrued before the property is finally
redeemed. (Lucao vs Mun. Of Alcala, 65 Phil. 164)
Art. 1620. A co-owner of a thing may exercise the right of redemption in case
the shares of all the other co-owners or of any of them, are sold to a third
person. If the price of the alienation is grossly excessive, the redemptioner
shall pay only a reasonable one.
Should two or more co-owners desire to exercise the right of redemption,
they may only do so in proportion to the share they may respectively have in
the thing owned in common.
Note: For Art. 1620 to apply, the share must have been sold to a THIRD
PERSON. Therefore, if the share is sold to a co-owner, there is no legal
redemption. Furthermore, the law says that the thing must be
SOLD,hence, redemption cannot exist in case of a mere lease.
If a co-owner desires to redeem, how much should be paid as the amount
of redemption?
-The co-owner who desires 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. Therefore, if the price is P28, 000.00, the tender of a check for
only P2,000 with a promise to later on pay the balance after said balance is
loaned from a bank is not sufficient. A check is not legal tender and the buyer
cannot be compelled to receive the money in installments. The contention that
a mere down payment is enough is wrong because what should have been
tendered was the full tender of the price that can honestly be deemed
reasonable under the circumstances without prejudice to final arbitration by
the court. (De Conejero vs CA, L-21812, April 29, 1966)

What rights can an adjacent owner of urban property exercise?

-Art. 1622 enumerates 2 rights that an owner of an adjacent urban property
may exercise:
1. Pre-emption - is a contractual right to acquire certain property newly
coming into existence before it can be offered to any other person or
entity. Also called a first option to buy at a reasonable price.
2. Redemption - is the right of owner of the adjoining land to redeem at a
reasonable price the property whose re-sale has been perfected

Art. 1621. The owners of adjoining lands shall also have the right of
redemption when a piece of rural land, the area of which does not exceed one
hectare, is alienated, unless the grantee does not own any rural land. This
right is not applicable to adjacent lands which are separated by brooks, drains,
ravines, roads and other apparent servitudes for the benefit of other estates.
If two or more adjoining owners desire to exercise the right of
redemption at the same time, the owner of the adjoining land of smaller area
shall be preferred; and should both lands have the same area, the one who
first requested the redemption.

If two or more owners of adjoining lands wish to exercise the right of

pre-emption or redemption, who will be preferred?
-According to Art. 1622 (3), the owner whose intended use of the land in
question appears best justified shall be preferred.

Note: The right of redemption under Art. 1621 may be exercised only
against a stranger who already has a rural land NOT against an adjacent
rural owner who purchases the property.
Note: Art. 1621 also known as the legal right or redemption of rural land,
refers to land that will be used for agricultural purposes to foster
development of agricultural areas by adjacent owners who may desire
the increase for the improvement of their own land. (Del Pilar vs
Catindig, 35 Phil. 623)
Art. 1622. Whenever a piece of urban land which is so small and so situated
that a major portion thereof cannot be used for any practical purpose 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 pre-emption at a
reasonable price.
If the re-sale has been perfected, the owner of the adjoining land shall
have a right of redemption, also at a reasonable price.
When two or more owners of adjoining lands wish to exercise the right
of pre-emption or redemption, the owner whose intended use of the land in
question appears best justified shall be preferred.

In order for the right of pre-emption to be properly invoked, what

requisites must concur?
-In order for Art. 1622(1) to apply, or the right of pre-emption to properly be
invoked, the following requisites must apply:
1. The land must be so small
2. It must be situated in a manner that a major portion thereof cannot be used
for any practical purose within a reasonable time.
3. It must have been previously bought by the seller merely for speculation.
Art. 1623. 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 not be recorded in the Registry of Property, unless accompanied by an
affidavit of the vendor that he has given written notice thereof to all possible
redemptioners. The right of redemption of co-owners excludes that of
adjoining owners .
Within what period may the rights of pre-emption and redemption be
exercised?
-According to Art. 1623, the right of pre-emption or redemption may be
exercised within 30days from the notice in writing by the prospective vendor
or by the vendor.

The law requires a notice to be in writing, is there any particular form

that should be followed?
-No, format is provided for in the law, hence any compliance with written
notice will suffice, including the giving of a copy of the deed of sale.
What if despite the lack of written notice there was actual knowledge,
will the right to redeem or pre-emption still be entitled to the person w/o
written notice?
-Yes, the person having the right to redeem is still entitled to the right of
pre-emption or redemption even with the absence of a written notice. The
purpose of the written notice is initiate the running of the 30-day period
within which such right is to be exercised, therefore, the absence of the
written notice does not start the running of the prescribed period.
A, B, and C are co-owners in equal shares of a 1 hectare rural land, the
adjoining owner to which are D and E, the latter owning the smaller area.
A donated his share of the land owned in common to X who is a rural
land owner. Upon proper notice of the conveyance, B, C, D and E sought
to exercise the right of legal redemption over the share conveyed. Who
among them, if any, should be preferred? Why?
-While co-owners are preferred over adjoining owners, still in the instant case,
not one will be preferred. As a matter of fact, no right of legal redemption
exists because A donated his share to X. There was no purchase, no dation en
pago, no transmission by onerous title.