EXTINGUISHMENT OF SALE

EXTINGUISHMENT OF SALE How a Contract of Sale Is Extinguise!" Generall# Generall#$$ through through payment of the price or performanc performance e ( i.e., delivery ; however, buyer-seller relationship relationship remains due to enforceability of warranties warranties )  ),, loss of the subject matter, condonation or remission, confusion or merger of the rights of creditor and debtor, compensation, novation, annulment, rescission, fulfillment of a resolutory condition, and prescription. S%eciall#$ through conventional or legal redemption which is unique to contracts of sale (pacto de retro) which retro) which may be exercised only by the seller as recognied by the contract, or by the transferee transferee of the rights, or by the person entitled by the law in legal redemption. Note: reservation Note: reservation of the right of repurchase stays the buyer-seller relationship with respect to such reservation until its period expires or when it is exercised. !owever, it does not prevent the full consummation of the contract of sale. "i#ewi "i#ewise, se, non-p non-paym ayment ent of the full full purch purchase ase price price does does not a$ect a$ect the runnin running g of the the redemption period as long as there were consent to sell and to purchase, partial payment, and delivery of possession of the property (%atangcalang v. "egayada&.

I& CON'ENTIONAL (E)EM*TION +at Constitutes Con,entional (e!e-%tion" (e!e-%tion" •

'. hen the seller reserved the the right to repurchas repurchase e what he sold with with the obligation obligation to return return the following) *. +he +he pur purchas chase e pric price; e; . +he expe expens nses es of the the contr contract act;; . +he legiti legitimate mate paymen payments ts made made due to to the sale; sale; and, and, . +he necess necessary ary and usefu usefull expenses expenses made made on the the thing. thing. •

How (igt of (e%urcase.(e!e-%tion Is (eser,e!"

'. /t must be reserved reserved by the the vendor by stipula stipulation tion in the same same contract contract of sale and not in a subsequent instrument. 0therwise, it may be some other right li#e an 1option to buy2. *. +he +he unde underl rlyi ying ng cont contra ract ct of sale sale must must be oper operat ativ ive e (tha (thatt is, is, the contr contract act must must not  contem contempla plate te an imposs impossibl ible e servic service e [Art. [Art. 1409, 1409, and the the vendor vendor must must have have a ri!ht ri!ht to trans"er the o#nership o" the thin! at the time it is delivered [Art. 14$9 &. 0therwise, the right of repurchase repurchase shall li#ewise be void because it can only be exercised exercised when there has been a performance 3 a complete transfer of the title over and ownership of the property. •

+en Can Te (igt of (e!e-%tion /e Exercise!"

If tere is no %erio! agree! u%on0  /t must be exercised within  years from the date of the contract. (4rt. '565& If tere is a %erio! agree! u%on0 ithin the period stipulated. !owever, the period must not exceed '6 years (4rt. '565&. 0therwise, the agreement is valid only for the first '6 years. Note: /f the agreement exceeds the '6-year rule, it shall be reduced to '6 years applying 4rt. '565. 4s long as there is a stipulation as to the period, even though unclear or void, the '6year rule shall apply, not the -year rule.

 +he completion of the redemption process is tolled by the filing of a civil action relating to the issue of the exercise of right of redemption provided that the exercise of the right and the filing of the suit are done within the redemption period. •

How is Con,entional (e!e-%tion Exercise!"

'. +here must be a notice of the exercise sent within the period of redemption. *. +here must be tender of payment of the price of the sale, the expenses of contract and other legitimate payments made by reason of the sale, and the necessary and useful expenses made on the thing sold. (4rt. '5'5&  +he seller7s reservation may charge every possessor whose right is derived from the buyer even if there was a second contract which did not mention anything about the reservation. (4rt. '568& 9ailure of to pay useful improvements entitles the buyer a retro to retain possession of the thing sold until actual reimbursement is done by the seller a retro. (:argollo v. uero& /t is enough that a sincere or genuine tender of payment, and not a moc# or deceptive one was made, to show that there was a valid tender of payment ("egaspi v. %4&. 0n the other hand, mere sending of letters expressing desire to repurchase without accompanying tender of  redemption price is insuulueta v. 0ctavio; "ee v. %4&. 0n the other hand, a  judicial action within the redemption period with the simultaneous deposit of the redemption price would suoining Owners of (ural Lan!$  +he owners of adjoining lands 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. +he burden of proof to apply the exemption (that the buyer does not own any rural land& lies with the buyer. ( rimary *tructures +orp. vs. alencia, 6F B%?4 A', *66&  +he right is not available to adjacent lands which are separated by broo#s, drains, ravines, roads and other apparent servitudes for the benefit of estates.  +he person exercising the right of redemption must be an owner of a rural land, otherwise, 4rticle '5*' cannot be invo#ed. /f two or more adjacent owners desire to exercise the right of legal redemption, the owner of the smaller area shall be preferred. Bhould both lands have the same area, the one who first requested the redemption shall be preferred. !& A-ong A!>oining Owners of Ur2an Lan!$ henever 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 resold, the owner of  any adjoining land has a right of pre-emption at a reasonable price. ( rimary  *tructures +orp. vs. alencia , 6F B%?4 A', *66& hen two or more owners of adjoining lands wish to exercise the right of preemption or redemption, the owner whose intended use of the land in question appears best justified shall be preferred. hen two or more owners of adjoining lands wish to exercise the right of preemption or redemption, the owner whose intended use of the land in question appears best justified shall be preferred ?edemption of urban land applies only when it involves its 1resale,2 and therefore there is no right of redemption that can be exercised by an adjoining owner when the urban land is transferred under an 1exchange2 of properties. ( -e *antos vs. +ity o" anila ,  B%?4 6F, 'FA*& e& Sale of a Cre!it in Litigation$ hen a credit or other incorporeal right in litigation is sold, the debtor shall have a right to extinguish it by reimbursing the assignee for the price the latter paid therefor, the judicial costs incurred by him, and the interest on the price from the day on which the same was paid. (4rticle '5, %ivil %ode& Co--ence-ent of Legal (e!e-%tion$

 +he right of legal pre-emption or redemption shall no be exercised except within 6 days from the notice in writing by the prospective seller, or seller, as the case may be.  +he deed of sale shall not be recorded unless accompanied by an a