III. Uso da informação
5. Métodos centrados na colecção
5.2. Exame directo da colecção (shelf scanning)
5.2.1. Exame da lista dos dados da estante (shelflist measurement)
Includes the ordinary causes of extinguishment of obligation:
1. Payment 2. Novation
3. Loss of the thing, etc…
Under the law on sales
1. The exercise of the right of resale will result in the extinguishment of the 1st sale.
The ownership of the 1st buyer will be terminated and such ownership will be vested to the 2nd buyer.
2. Rescission or cancellation will extinguish COS
3. Redemption either conventional or legal
Kinds:
A. Conventional - it is because the right to repurchase is expressly reserved in the contract and thus this right may only arise in 1 kind of contract. This is a sale with a right to repurchase or a pacto de retro sale.
B. Legal- may be exercised by co-owners or by owners of adjacent lot
A. Conventional
If there was no stipulation as to the right of redemption then no right of redemption
Q: In the exercise of this right, how much would have to be offered by the seller in order to redeem the property? Would the price paid by the buyer be sufficient in order to repurchase the same?
A: Not necessarily, under the law, the amount which has to be offered by the seller a retro in the exercise of the right of redemption are: (1) price paid; (2) the expenses incurred by the vendee for the execution of the contract; (3) necessary and useful expenses incurred by the buyer.
Example
In the sale of land, in order to preserve the land which is located beside the river, the buyer may have put up a wall in order that it may not erode.
The expenses incurred by the buyer will be considered as necessary expenses for the preservation of the thing sold and such expenses have to be reimbursed by the seller, in the right of the seller to repurchase the thing sold.
Growing fruits Example
Q: In a mango plantation, there may be fruits at the time of redemption. The value of the fruits is 100k. Can the seller be compelled to pay for the value of the fruits?
A: The answer will depend on whether there are fruits at the time of the sale. If there were fruits at the time of the sale, the seller will only be obliged to pay for the fruits at the time of redemption if at the time of the sale, the buyer paid for the price of the value of the fruits.
So again, there were fruits at the time of redemption, whether or not the seller would have to pay for the fruits at the time of redemption would depend on whether or not there were fruits at the time of the sale. Take note that the sale may have been 2 years before that or 3 years before that but if at the time of the sale there were fruits and the buyer paid for the value of these fruits, it is reasonable that the seller would also have to pay for the value of the fruits at the time of repurchase.
But if at the time of the sale, there were fruits but the buyer did not pay for the value of the fruits then the seller should not likewise be compelled to pay for the value of the fruits at the time of redemption.
There were no fruits at the time of the sale but there were fruits at the time of redemption.
Q: If a COS was entered into in 2001 and there were no fruits at the time of the sale. However, at the time of redemption April 1, 2005 there were fruits. The value of which is 100k. How much can the seller be compelled to pay for these fruits?
A: Under the law, the seller can be compelled to pay for the value of the fruits in proportion to the period in which the buyer was in counted from the anniversary date of this contract. Yung anniversary date ay every Jan 1. Yung anniversary date this year Jan 1, 2005, from Jan 1, 2005 up to April 1, 2005 - the buyer would be in possession for 3 months out of 12 months is ¼ of the entire year.
Therefore, how much can the seller be compelled to pay? 25,000 – ¼ of the value. The longer the buyer is in possession of the goods, the bigger the amount which has to be paid by the seller.
Atty. Uribe’s Comment: It is reasonable. If the buyer has been in possession for a longer period of time then he would have tend more for the preservation of the thing or fruits. In fact, if the date of redemption period is July 1 and the seller would have to pay 50% in proportion to the period when the buyer was in possession counted from the anniversary date.
Period in conventional redemption
BE: Ariel sold a land to Jessica for 10k with a right to repurchase expressly agreed upon between the parties. Because they were
friends, they did not provide for a period within which the seller may exercise the right to repurchase. But again, there was a reservation of the right to repurchase only that the parties failed to fix the period.
a. When should the seller a retro exercise the right to repurchase?
b. If the seller failed to repurchase within the period agreed upon or the period prescribed by law, what will be your advice to the buyer in order to protect the buyer more?
A: (a) The period is 4 years. Under the law, if there is a right of redemption but the parties failed to provide for such a period, the law itself says that right may be exercised only within 4 years.
However, if the parties stipulated as to the period within which the right may be exercised like 20 years, the law provides, it cannot exceed 10 years and hence the 20-year period will be reduced.
Hindi naman void yung 20 years totally, it will just be reduced to 10 years because the law provides that it should not exceed 10 years.
(b) To file an action for the consolidation of the title.
Q: In a sale with a right to repurchase, ownership passes when? Upon the expiration of the period to repurchase?
A: No, it follows the general rule in sale that ownership passes to the buyer upon the delivery as a rule.
Q: So what will be the effect of the expiration of the period for repurchase without the seller exercising such a right? Or even if he did exercise it was not valid exercise of a right, like for example: a total amount which should have offered 500k. He only offered to pay 300k.
Hence, the buyer can refuse and therefore the right to repurchase was not validly exercised.
Thus, assuming there was no exercise of the right to repurchase what is the effect on the ownership of the buyer?
A: Buyers right or ownership over the thing becomes absolute. During the period he has ownership but his ownership is subject to a resolutory condition which is the valid exercise of the right to repurchase. If the right to repurchase, his ownership will be terminated.
Q: Would this be correct - that upon the lapse of the period without the seller having exercised the right to repurchase the ownership of the buyer becomes absolute? Is
this true also in sale of immovable? Or true only in sale of movable?
A: It does not matter, it is true in every COS with a right to repurchase. From the moment by the fact that the seller was not able to exercise the right to repurchase within the period provided by law, the ownership of the buyer becomes absolute.
Q: The law requires for an action for consolidation of title, is this necessary in order the buyer to acquire ownership or at least to acquire absolute ownership?
A: No, this action is only necessary if he would want the property to be registered in his name. In a sale of immovable with a right to repurchase and the period for repurchase has already expired without the seller exercising such right, the buyer can only have the property registered in his name by filing such an action with the court. Thus, in order to protect him further maganda yung action for consolidation of title kaysa naman the thing will be sold by the seller to another person.
Q: Assuming you are a lawyer, a client asked you to examine a document which is denominated as a DOS with a right to repurchase and that client was the seller was the seller a retro (he would have the right to repurchase). However, upon examination of the terms and conditions of the contract, it appears that the right has long expired. Thus, the client asked, may I still be able to recover this parcel of land which is the subject matter of this contract?
A: Consider the possibility that the client may recover. Ask the client of the circumstances surrounding the execution of that document. Ask him “Why did you execute this DOS?” If the answer is “kasi po atty. nagka utang ako sa kanya 150k tapos sabi nya instead of executing a mortgage agreement, DOS with a right to repurchase”.
Anyway, from the DOS with a right to repurchase, he may appear to be protected. Kasi if he owes that person 1M and if he is given in the debt a period of 1 year within which to pay in the DOS with a right to repurchase, he would also have 1 year within which to repurchase. Diba parang pareho lang? But instead of mortgage he was asked to sign a DOS. If that is the case, clearly you can conclude that this is not an honest to goodness sale with a right to repurchase. You can treat this transaction merely as an equitable mortgage. Hence, he may still be able to recover what was the subject matter of that transaction.
Q: Why would the creditor ask his debtor to sign a DOS with a right to repurchase instead of a mortgage to secure the fulfillment of his obligation?
A: To ensure that the property will be owned by him automatically upon the expiration of the period within which to repurchase and the seller a retro failed to exercise the right to repurchase which will not happen in a mortgage. There is a principle in mortgage known as pactum commissorium. Upon the default of the debtor the mortgagee, cannot validly appropriate the thing for himself. Ownership will not automatically pass by mere default of the principal debtor because pactum commissorium is void because the remedy of the creditor is to have the property sold in a foreclosure sale not to appropriate the thing. So to avoid those requirements sa mortgage, ang gagawin ng seller/
creditor is to have the debtor sign a DOS with a right to repurchase because the moment the debtor failed to repurchase within the period, absolute ownership goes to the creditor who is in that sale the buyer (creditor) a retro. Wala na syang kailangan gawin.
If the instrument is a DOS with a right to repurchase it may actually be considered as an equitable mortgage by just examining the terms and conditions of that contract. There are certain instances when the law itself provides for a presumption that this is an equitable mortgage under 1602.
BE: What are those instances?
1. The price is grossly inadequate.
Example: If the value of land is 1M, the price stated in the DOS is 100k which is grossly inadequate. Kaya 100k yun kasi ang utang nya talaga 100k.
Q: But is this presumption conclusive?
A: No, this is merely a disputable presumption. In fact, the SC would sustain the validity of a sale with a right to repurchase despite the gross inadequacy of price because somehow it would be advantageous to the seller a retro. In the exercise of the right to repurchase, it is more advantageous if the price is small because he can easily come up with that amount and repurchase the thing.
2. If the vendor a retro would continue to be in the possession of the thing after the sale, which is unusual because if indeed this is a sale then the vendee should be in possession after the sale.
Note: This is only a disputable presumption.
Q: What if there was a stipulation in the COS that the seller will shoulder the capital gains tax? Would the presumption that this is an equitable mortgage will arise?
A: No, the presumption will only arise if the seller bound himself to pay the tax on the thing not the capital gains tax. That would be the real property tax.
Atty. Uribe’s Story: Hindi ako magaling sa tax.
Sabi ni Justice Vitug, he was our reviewer, kung sya raw ang examiner, he would only ask questions on general principles on taxation wala ung remedies or procedure. Naniniwala ako kay Justice Vitug, it turned out yung mga questions talagang general principles kaya naka-tyamba ako.
He He He He
Anyway, under the law on taxation it is the seller who has the obligation to pay the capital gains tax unless otherwise agreed upon with the buyer would have to pay the tax. The presumption that this is an equitable mortgage will only arise if the seller bound himself to pay on the tax of the thing even after the sale. Kasi hindi sya owner, why should he pay for the tax on the thing?
Note: Presumptions under 1602 would arise regardless of whether the sale is denominated as a sale with a right to repurchase or a DOS. It doesn’t matter. Even if it is a DOS if there is doubt as to whether or not it is an equitable mortgage. It has to be resolved as an equitable mortgage.
Q: Remedy of seller a retro?
A: Reformation because the contract as written did not reflect the real intention of the parties. The real intention is to secure the fulfillment of the obligation of the vendor a retro (debtor).
B. Legal Redemption
Q: Who have the right to redeem?
A: 2 groups 1. Co-owners
2. Owners of adjacent lots (object is lot) - consider if rural or urban land Co-owners
Q: Co-owners of what thing, movable or immovable?
A: It does not matter.
Q: A, B, C, D co-owners of land. D donated his interest in the land to X. would A, B, C, have the right to redeem?
A: No, in legal redemption, the alienation by a co-owner must be by onerous title (sale, dacion en pago, barter). This act (donation) is gratuitous act.
Hence, no right of redemption.
Q: What if B sold his interest in the land to D.
would A and C have the right to redeem?
A: No, because for A and C to have the right to reddem, the alienation should be in favor of a 3rd person.
Q: What if B sold his interest in the land to X.
A, D, C, wanted to redeem. May they be able to exercise the right of redemption? All of them?
A: Yes. All of them.
Q: Is this the same rule in adjacent lots?
A: No, in adjacent lots, there can be so many owners depending on how it is big. The owner with the smallest land area would have the right to redeem.
Q: What if the owners of adjacent lots would have equal area?
A: The first one who manifested his desire to redeem.
As to Co - owners
BE: Land owned by spouses was sold by the spouses to their three sons in 3 different deeds of sale. In each DOS the specific area was already described. After the execution of the DOS, these children would actually harvest only their respective area. They wanted to have their respective share registered in their own name. They filed a petition for the cancellation of the title of their parents for that property to be divided, they submitted their individual DOS. But the petition was denied by the register of Deeds because they failed to submit a subdivision plan. The RD cancelled the TCT in the name of the parents issued another TCT in the name of the 3 children in one TCT. One of the children sold the land to a 3rd person.
Can the 2 other brothers redeem as co-owners?
A: No, because under the facts, they are no longer co-owners. A TCT is not conclusive as to the rights of the parties to a certain property. Pwedeng apparently co - owners sila but in reality there has already been a participation of the property, yun lang hindi pa naka-reflect sa TCT. In fact, a property may be registered in a person who is not the owner kasi na - forge lang yung signature ng real owner. Thus, the requirement of the law that the co-owner would have the right to redeem is not present therefore, there would be no right of redemption.
Q: A, B, C co-owners. A’s share ¼. B’s share ¼.
C’s share ½. B sold his interest in the land to X.
However, A and C both wanted to redeem. (As co-owners they may have the right to redeem).
If they cannot agree on the portion of the share of B which will be redeemed by both of them - what would be the final sharing?
A: C will have 2/3, A will have 1/3 because they will have the right to redeem in proportion to their share in that property. Note: they may stipulate as to the sharing.
Q: What if in the DOS executed between B and X, the price stated in DOS was 3M. Hence, A and C can be compelled to redeem by paying 3M?
A: Not necessarily, under the law, if the price stated in this sale is unconscionable, the redemptioners can only be compelled to pay the reasonable value. Ang posibleng value could only be 1M pero ang nakalagay sa DOS 3M. Is it possible that X did not pay 3M? Yes. Why would they do that? The reason for that is to pre-empt A and C from exercising the right of redemption. To discourage them from redeeming the property kasi kung mura yan they can easily exercise the right of redemption.
The law protects the redemptioners - if the price is unconscionable - they may pay reasonable value.
Q: What if the value is 3M but DOS stated 1M but X actually paid 3M (1M was stated to reduce tax liability). How much A and C can be compelled to pay?
A: Doromal vs CA
Held: The co-owners can only be compelled to pay the price stated in the deed of sale. The trial court sustained the claim of the buyer that they be reimbursed the actual amount paid because according to the trial court that would be immoral to pay only the amount stated in the contract. SC said it was more immoral yung ginagawa ng parties to pay only a small amount where in fact the real amount paid is a much higher amount. Because the only purpose of this is to defraud the government.
Owners of Adjacent Lots
Make a distinction between a sale of an urban land and sale of rural land.
Sale of Urban land Requisites:
1. The land is so small and purchased only
1. The land is so small and purchased only