EXTINGUISHMENT OF SALE ART. 1600. Sales are extinguished by the same causes as all other obligations, by those stated in the preceding articles of this Title, and by conventional or legal redemption. (1506) Causes for extinguishment of sale. The modes or causes of extinguishing the contract of sale may be classified into: (1) Common or those causes which are also the means of extinguishing all other contracts like payment, loss of the thing, condonation, etc. (see Art. 1231.); (2) Special or those causes which are recognized by the law on sales (such as those covered by Articles 1484, 1532, 1539, 1540,1542, 1556, 1560, 1567, and 1591.); and (3) Extra-special or those causes which are given special discussion by the Civil Code and these are conventional redemption and legal redemption. (see 10 Manresa 300, 303.) Conventional Redemption ART. 1601. Conventional redemption shall take place when the vendor reserves the right to repurchase the thing sold, with the obligation to comply with the provisions of article 1616 and other stipulations which may have been agreed upon. (1507) Conventional redemption defined. Conventional redemption is the right which the vendor reserves to himself, to reacquire the property sold provided he returns to the vendee the price of the sale, the expenses of the contract, any other legitimate payments made there for and the necessary and useful expenses made on the thing sold (Art. 1616.), and fulfills other stipulations which may have been agreed upon. Subject matter of conventional redemption. Both real and personal property may be the subject matter of pacto de retro sales or sales with right to repurchase although there are certain articles (Arts. 1607, 1611, 1612, 1613, 1614, 1617, 1618.) which are applicable only to immovables. Nature of conventional redemption. (1) It is purely contractual because it is a right created, not by mandate of the law, but by virtue of an express contract. (2) It is an accidental stipulation and, therefore, its nullity cannot affect the sale itself since the latter might be entered into without said stipulation. (3) It is a real right when registered, because it binds third persons. (4) It is potestative because it depends upon the will of the vendor. (see Art. 1182.) (5) It is a resolutory condition because when exercised, the right of ownership acquired by the vendee is extinguished. (see Art.1179; In a pacto de retro sale, the title or ownership of the property sold is immediately vested in the vendee a retro, subject only to the resolutory condition of repurchase by the vendor a retro within the stipulated period. (6) It is not an obligation but a power or privilege that the vendor has reserved for himself. (7) It is reserved at the moment of the perfection of the contract for if the right to repurchase is agreed upon afterwards, there is only a promise to sell which produces different rights and effects and is governed by Article 1479. (8) The person entitled to exercise the right of redemption necessarily is the owner of the property sold and not any third party. Unlike a debt which a third person may satisfy even against the debtor’s will (see Art. 1237.), the right of repurchase may be exercised only by the vendor in whom the right is recognized by contract or by any person in whom the right may have been transferred. (9) It gives rise to reciprocal obligation that of returning the price of sale and other expenses, on the part of the vendor (Art. 1616.); and that of delivering the property and executing a deed of sale therefor, on the part of the vendee. The plea that the vendee made delivery of the
property to a third person whom he believed was better entitled to possess it, cannot serve as an excuse for the failure to comply with said obligation. Option to buy and right of repurchase distinguished. An option to buy is different and distinct from the right of repurchase which must be reserved by the vendor by stipulation to that effect in the contract of sale. This is clear from Article 1601. (1) The right of repurchase is not a right granted the vendor by the vendee in a subsequent instrument, but a right reserved by the vendor in the same instrument of sale as one of the stipulation of the contract. (2) Once the instrument of absolute sale is executed, the vendor no longer reserves the right to repurchase, and any right thereafter granted the vendor by the vendee in a separate instrument cannot be a right of repurchase, but some other right like the option to buy. (a) Accordingly, a deed of absolute sale and an option to buy together, cannot be considered as evidencing a contract of sale with pacto de retro. Such option does not evidence a right to repurchase, the extension of the period for the exercise of which (option) does not fall under No. 3 of Article 1602. (b) Similarly, in an early case, it has been held that an agreement to repurchase becomes a promise to sell when made after an absolute sale because where the sale is made without such an agreement, the purchaser acquires the thing sold absolutely, and if he afterwards grants the seller the right to repurchase, it is a new contract entered into by the purchaser, as absolute owner already of the object. Right to redeem and right of repurchase distinguished. The right to redeem becomes functus officio on the date of its expiry, and its exercise after the period is not really one of redemption but a repurchase. Distinction must be made because redemption is by force of law; the purchaser at public auction is bound to accept redemption. Repurchase, however, of foreclosed property, after redemption period, imposes no such obligation. After expiry, the purchaser may or may not re-sell the property but no law will compel him to do so. And, he is not bound by the bid price; it is entirely within his discretion to set a higher price, for after all, the property already belongs to him as owner.’’ ART. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases: (1) When the price of a sale with right to repurchase is unusually inadequate; (2) When the vendor remains in possession as lessee or otherwise; (3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed; (4) When the purchaser retains for himself a part of the purchase price; (5) When the vendor binds himself to pay the taxes on the thing sold; (6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation. In any of the foregoing cases, any money, fruits or other benefits to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws. (n) Equitable mortgage defined. An equitable mortgage is one which lacks the proper formalities, form or words, or other requisites prescribed by law for a mortgage, but shows the intention of the parties to make the property subject of the contract as security for a debt and contains nothing impossible or contrary to law.
“Pacto de retro” and mortgage, distinguished. The following are the distinctions:
(1) In pacto de retro, ownership is transferred but the ownership is subject to the condition that the seller might recover the ownership within a certain period of time,3 while in mortgage, ownership is not transferred but the property is merely subject to a charge or lien as security for the compliance of a principal obligation, usually a loan; (2) If the seller does not repurchase the property upon the very day named in the contract, he loses all interest thereon, while the mortgagor does not lose his interest in the property if he fails to pay the debt at its maturity; and (3) In the case of a pacto de retro, there is no obligation resting upon the purchaser to foreclose. Neither does the vendor have any right to redeem the property after the maturity of the debt.On the other hand, it is the duty of the mortgagee to foreclose the mortgage if he wishes to secure a perfect title thereto, and after the maturity of the debt secured by the mortgage and before foreclosure, the mortgagor has a right to redeem. A vendor who decides to redeem or repurchase a property sold with pacto de retro in a sense stands as the debtor and the vendee as the creditor of the repurchase price. Subsequent sale of property by vendor a retro. The sole right of the vendor under a pacto de retro agreement is that of redemption. He has no other interest left in the property which he can transfer. (But a sale subsequently made by the vendor to an innocent purchaser for value could defeat the vendee’s title and right to possession if the latter’s right is not properly registered or annotated. When contract with right to repurchase presumed an equitable mortgage. For a presumption of an equitable mortgage to arise, there are two (2) requisites, namely: that the parties entered into a contract denominated as a contract of sale with a right of repurchase or purporting to be an absolute sale (Art. 1604.) and that their intention was to secure an existing debt by way of mortgage. Article 1602 enumerates six distinct and separate circumstances the presence of any (not a concurrence) of which is sufficient to give rise to the presumption that a contract, regardless of its nomenclature, is an equitable mortgage in consonance with the rule that the law favors the last transmission of property rights. ART. 1603. In case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage. (n) ART. 1604. The provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale. (n) Presumption in case of doubt. (1) Doubt resolved in favor of equitable mortgage. — Whether the sale is absolute or pacto de retro, it shall be presumed to be an equitable mortgage even if only one of the circumstances mentioned in Article 1602 is present. This is so because pacto de retro sales with the stringent and onerous effects that accompany them, are not favored. In case of doubt, a contract purporting to be a sale with right to repurchase shall still be regarded as an equitable. a. A contract of reconveyance is but a necessary consequence of the exercise of a party’s right to repurchase the property subject of a contract of sale with a right of repurchase or of an equitable mortgage. b. The failure of the alleged vendee to take steps to consolidate ownership of real property after the vendor failed to redeem within the period agreed upon, may be taken as a factor in construing a sale a retro an equitable mortgage. c. Where the contract is deemed an equitable mortgage, ownership of the property cannot be consolidated until after foreclosure of the mortgage has been undertaken. (2) Presumption, an exception to general rule. — Article 1603 is an exception to the rule that doubts affecting an onerous contract shall be settled in favor of the greatest reciprocity of interests. (Art.1378, par. 1.) An equitable mortgage effects a lesser transmission of rights and
interests than a contract of sale, since the debtor does not surrender all rights to his property but simply confers upon the creditor the right to collect what is owing from the value of the thing given as security. ART. 1605. In the cases referred to in articles 1602 and 1604, the apparent vendor may ask for the reformation of the instrument. (n) When vendor may ask for reformation. Article 1604 seeks to prevent a circumvention of Article 1602 by making the contract of loan appear as an absolute sale. Reformation is that remedy granted by law by means of which a written instrument is made or construed so as to express or conform to the real intention of the parties when such intention is not expressed in the instrument. (see Art. 1359.) If the parties really intended a mortgage but the instrument states that the property is sold absolutely or with a right of repurchase, the same may be reformed (Art. 1365.) so that the contract should appear to be a mortgage and not an absolute sale or a pacto de retro sale. In reformation, there has been a meeting of the minds between the parties, but the written instrument purporting to embody their agreement does not express their true intention by reason, for instance, of mistake or fraud. (Art. 1359.) Where there has been no meeting of the minds, the remedy is annulment. (Art. 1390.) ART. 1606. The right referred to in article 1601, in the absence of an express agreement, shall last four years from the date of the contract. Should there be an agreement, the period cannot exceed ten years. However, the vendor may still exercise the right to repurchase within thirty days 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. (1508a) Period for exercise of right of redemption. Article 1606 refers to conventional redemption. It does not apply where the contract is not one of sale with right of repurchase. For conventional redemption to take place, the vendor should reserve, in no uncertain terms, the right to repurchase the thing sold. (see Art. 1601.) Thus, the right to redeem must be expressly stipulated in the contract of sale in order that it may have legal existence. Accordingly, where the contract provides: “In case of sale” by the buyer of the property (sold) to the seller, the Supreme Court held that the stipulation does not grant the right of repurchase. The quoted phrase should be construed to mean “should the buyer wish to sell” which is the plain and simple import of the words, and not “the buyer should sell.” When Article 1606, par. 3, not applicable. (1) Contract found to be an absolute sale. — Article 1606, paragraph 3 is not applicable where the contract is found to be an absolute deed of sale, pure and simple. There could not even be a period of redemption. It refers to cases involving a transaction where the seller contests or denies that the true agreement is one of sale with right to repurchase and claims that the real intention was a loan with equitable mortgage, but the court decides otherwise. (2) Sale known and admitted by vendor as pacto de retro. — Neither is said provision applicable where the sale is admittedly one with pacto de retro. If the rule were otherwise, it would be within the power of every vendor a retro to set at naught a pacto de retro or resurrect an expired right of repurchase, by simply instituting an action to reform the contract — known to him to be in truth, a sale with pacto de retro — into an equitable mortgage. The issue or controversy between the parties must concern or involve the juridical nature or character of the contract in question and the court makes an express finding that the contract is one of pacto de retro. Effect of stipulation extending period
of repurchase. (1) After expiration of period of redemption. — It is legally impossible to speak of extension because that which is extinguished cannot be extended and because the ownership in the vendee is already consolidated, and becomes absolute. (2) Before the expiration of the period of redemption. — The original term may be extended provided that the extension, including the original term, shall not extend beyond 10 years; otherwise, the extension is void as to the excess. 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 Article 1616 shall not be recorded in the Registry of Property without a judicial order, after the vendor has been duly heard. (n) Judicial order for recording of consolidation of ownership. (1) Necessity. — If real property is involved and the vendor failed to redeem within the period agreed upon, the vendee’s title becomes irrevocable but the consolidation of ownership in the vendee shall not be recorded in the Registry of Property without a judicial order and until after the vendor has been duly heard. The reason is that the transaction may not be a genuine pacto de retro but only an equitable mortgage. (2) Purpose. — The requirement provides additional safeguards to debtors. The purpose is not only to have all doubts over the true nature of the transaction speedily ascertained and decided, but also to prevent the interposition of buyers in good faith while such determination is being made. Action to consolidate ownership. (1) Ordinary civil actions. — The consolidation shall be effected through an ordinary civil action cognizable by the Regional Trial Court wherein the vendor a retro is made a party defendant. The petition to consolidate ownership under Article 1607 does no partake of the nature of a motion, it not being merely an incident to an action or proceeding. Article 1607 contemplates a contentious proceeding wherein the vendor a retro must be named respondent in the caption and title of the petition for consolidation of ownership and duly summoned and heard. The failure on the part of the court to cause the service of summons as prescribed (in Rule 14, Rules of Court is sufficient cause for attacking the validity of the judgment and subsequent orders on jurisdictional grounds. (2) Registration proceedings. — Where the land has been sold under pacto de retro, the vendor a retro may file an application for the original registration of the land. However, should the period for redemption expire during the pendency of the registration proceedings and ownership to the property consolidated in the vendee a retro, the latter shall be substituted for the applicant and may continue the proceedings. ART. 1608. 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 third persons. (1510) Nature of right to redeem. (1) A right, not an obligation. — The right to redeem is what it is: a right, not an obligation; therefore, consignation (Art. 1256. is not required to preserve the right to redeem. Thus, the allegation that the offer to redeem was not sincere because there was no consignation of the purchase price is devoid of merit. But to actually redeem, there must, of course, be payment or consignation. (2) A real right. — 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 the 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. ART. 1609. The vendee is subrogated to the vendor’s rights and actions. (1511) Rights acquired by vendee a retro. (1) Vendee subrogated to vendor’s rights. — Subrogation transfers to the person subrogated the credit with all the rights thereto appertaining. (Art. 1303.) The above article is logical because a pacto de retro sale transfers ownership to the vendee although subject to the condition of repurchase. As owner, the vendee, for example, may transfer or alienate his right to a third person, mortgage the property, enjoy the fruits thereof, recover the property against every possessor, and perform all other acts of ownership subject only to the right of redemption of the vendor. Of course, the vendor cannot transfer ownership if he is not the real owner. (2) Right to eject vendor. — Prior possession by the vendee a retro of the property is not a condition precedent in an unlawful detainer action against the vendor a retro who, after having failed to redeem, and title in the vendee a retro had been consolidated, refused to vacate the property. ART. 1610. The creditors of the vendor cannot make use of the right of redemption against the vendee, until after they have exhausted the property of the vendor. (1512) Right of vendor’s creditors to redeem. This article is a practical application of Article 1177 permitting creditors to exercise the rights and actions of their debtor after exhausting his properties to satisfy their claims. (see Manresa 331.) 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. 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. ART. 1611. In a sale with a right to repurchase, the vendee of a part of an undivided immovable who acquires the whole thereof in the case of article 498, may compel the vendor to redeem the whole property, if the latter wishes to make use of the right of redemption. (1513) Redemption in sale of part of undivided immovable. The purpose of the above article (and Arts. 1612-1615.) is to discourage co-ownership which is recognized as undesirable, since it does not encourage the improvement of the property co-owned. (1) A co-owner may demand the partition of the thing owned in common insofar as his share is concerned. (Art. 494.) (a) If the thing is essentially indivisible, it may be allotted to the coowner who shall indemnify the others. (b) If the co-owners cannot agree that the thing be allotted to one of them, it shall be sold and its proceeds distributed. (Art. 498.) (2) In either case, the vendee who acquires the whole of an undivided immovable a part of which is subject to a right to repurchase, has a right to demand that the vendor a retro, who likes to exercise his right of redemption, redeem the whole property ART. 1612. If several persons, jointly and in the same contract, should sell an undivided immovable with a right of repurchase, none of them may exercise this right for more than his respective share.
The same rule shall apply if the person who sold an immovable alone has left several heirs, in which case each of the latter may only redeem the part which he may have acquired. (1514) ART. 1613. In the case of the preceding article, the vendee may demand of 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. (1515) Redemption in joint sale by co-owners/ co-heirs of undivided immovable. (1) 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. (Art. 1612, par. 1.) (2) Similarly, the co-heirs of the vendor of an undivided immovable can exercise the right of redemption only for the respective portions they have inherited. (3) 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. (Art. 1613.) This right is given to the vendee in line with the object of the law to put an end to co-ownerships whenever possible. (4) Under Article 1620 (infra.), the right of a co-owner who chooses not to redeem accrues to the benefit of the others. The extent of the share of the redeeming co-owner is not taken into account except as provided in the second paragraph thereof.
Article 1616 defines the obligations of the vendor who desires to exercise his right of repurchase. He must return to the vendee a retro: (1) The price. — The law speaks of “price of the sale” and not the value of the thing. It is lawful, however, for the parties to agree that the price to be returned will be more or less than the original sum paid by the vendee (2) Expenses of contract and other legitimate expenses. — If the expenses for the execution and registration of the sale were paid by the vendee, the same shall be reimbursed by the vendor. But they need not be paid at the very time of the exercise of the right since they are unknown amounts. They may be paid later. The same is true of necessary and useful expenses ART. 1617. If at the time of the execution of the sale there should be on the 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. (1519a) 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 customs of the place where the land is situated. (1520)
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. (1516)
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.
Redemption in separate sales by co-owners of undivided immovable. Although it is the policy of the law to avoid indivision, it would be unjust, if the sale was made separately and independently, to require the coowners to come to an agreement with regards 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.
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. The law, however, establishes an exception with respect to leases which the vendee may have entered into in good faith according to the custom of the place where the land is located. The exception is dictated by public convenience in the interest of agriculture.
ART. 1615. If the vendee should leave several heirs, the action for 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. (1517) Redemption against heirs of vendee. 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. ART. 1616. The vendor cannot avail himself of the right of repurchase without returning to the vendee the price of the sale, and in addition: (1) The expenses of the contract, and any other legitimate payments made by reason of the sale; (2) The necessary and useful expenses made on the thing sold. (1518) Obligation of vendor a retro in case of redemption.
SECTION 2. — Legal Redemption ART. 1619. Legal redemption is the right to be subrogated, upon the same terms and conditions stipulate 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. (1521a) Legal redemption defined. Article 1619 gives the definition of legal redemption. As the word “thing” is employed without qualification, the right applies to both movable and immovable property. Transfer of ownership by onerous title. Subrogation transfers to the person subrogated the rights pertaining to another. (Art. 1303.) Note that legal redemption may take place not only in purchase or dation in payment but in any other transfer of ownership by onerous title. It has been held, however, 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. Dation in payment defined. Dation in payment or dacion en pago is the transmission of the ownership of a thing by the debtor to the creditor as the accepted equivalent of the performance of an obligation.
Nature of dation in payment. (1) Sale of thing. — The undertaking partakes in one sense of the nature of sale, 1 that is, the creditor is really buying the thing or property of the debtor, payment for which is to be charged against the debtor’s debt. As such, the essential elements of contract of sale, namely, consent, object certain, and cause or consideration must be present. It is, therefore, governed by the law of sales.2 (2) Novation of an obligation. — In its modern concept, what actually takes place in dacion en pago is an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale, while the debt is considered as the purchase price. 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. (1522a) Right of legal redemption of co-owner. The right of legal redemption among co-owners presupposed of course, the existence of a co-ownership. The following are the requisites for the right to exist: (1) There must be co-ownership of a thing; (2) There must be alienation of all or of any of the shares of the other co-owners; (3) The sale must be to a third person or stranger (Art. 1620.),i.e., a nonco-owner; and (4) The sale must be before partition. The right of a co-owner to legal redemption is based on his status as such independently of the size of his share. It can no longer be invoked where there had been an actual partition of the property so that co-ownership no longer exists. Redemption by a coowner within the period prescribed by law (see Art. 1623.) inures to the benefit of all the other co-owners. 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. (1523a) Right of legal redemption of adjacent owners of rural lands. The following are the requisites for the exercise of the right under this article: (1) Both the land of the one exercising the right of redemption and the land sought to be redeemed must be rural; (2) The lands must be adjacent; (3) There must be alienation; (4) The piece of rural land alienated must not exceed one (1hectare; (5) The grantee or vendee must already own any other rural land; and (6) The rural land sold must not be separated by brooks, drains, ravines, roads and other apparent servitudes from the adjoining lands. The lands mentioned in paragraph 2 of Article 1621 are not really adjacent. When the land exceeds one (1) hectare, the adjacent owners are not given the right of legal redemption because this may lead to the creation of big landed estates. The right cannot be exercised against a vendee if he is also an adjacent owner. The last paragraph of Article 1621 refers to a situation where the vendee of a piece of rural land is not an adjoining owner.
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. (n) Rights of pre-emption and legal redemption of adjacent owners of urban lands. (1) Meaning. — Article 1622 recognizes two rights; namely: (a) Pre-emption, which has been defined as the act or right of purchasing before others. It is exercised before the sale or resale against the would-be vendor; and (b) Redemption, which is exercised after the sale has been perfected against the vendee. The recognition of the right of redemption will result in the rescission of the sale. (2) Requisites. — The conditions or requisites for the exercise of the right of pre-emption or redemption, as the case may be, are the following: (a) The one exercising the right must be an adjacent owner; (b) The piece of land sold must be so small and so situated that a major portion thereof cannot be used for any practical purpose within a reasonable time; and c) Such urban land was bought by its owner merely for speculation. The above requisites must be alleged by the adjoining owner in his complaint and proved by him. (3) Price. — The price to be paid is a reasonable price. In a case, an adjoining owner was held not entitled to redeem a lot (612 sq. meters) which was much bigger area-wise, than the lot (140 sq.meters) owned by him. (4) Preference as between two or more adjacent owners. — In case two or more adjoining owners desire to exercise the right of legal redemption, the law prefers him whose intended use of the land appears best justified. (last par.) The determinative factor is the intended use that appears best justified, and not whether the land was acquired for speculative purposes.
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. (1524a) Exercise of right of pre-emption or redemption. Article 1623 stresses the need for notice in writing in the three (3) species of legal redemption mentioned in Articles 1620, 1621, and 1622. While the co-owner’s right of legal redemption is a substantial right, it is exceptional in nature, limited in its duration and subject to strict compliance with legal requirements. One of these is that the redemptioner should tender payment of the redemption money within 30 days from written notice of the sale by the co-owner. One who purchases an undivided interest in a property is charged with notice that this acquisition is subject to redemption by any other co-owner within the statutory 30-day period. The right of redemption of co-owners (Art. 1620.) is preferred over that of adjoining owners. (Arts. 1621, 1622.) In other words, the law attaches more importance to the necessity to put an end to tenancy in common than to the purpose of encouraging the development of agriculture. Under Article 484 of the Civil Code, there is co-ownership whenever the ownership of an undivided thing or right belongs to different persons. There is no longer co-ownership when the different portions owned by different people are already concretely determined and separately identifiable, even if not yet technically described. This situation makes inapplicable the provision on the right of redemption of a co-owner under Article 1623.
