A and B are co-owners of a residential house and lot and the area of the lot is 300m2 while the

floor area of the house is 250m2. A sold under pacto de retro sale his share in the house and lot in favour of C redeemable after two years. ubse!uently" B sold his share under absolute sale in favour of C. #hen the two-year redemption period e$pired" A offered to redeem from C his share in the property but C refused contendin% that if A would li&e to redeem" he should redeem the whole or entire property. #ho is correct' C is correct because the vendee a retro can compel the vendor a retro to redeem the entire property if the latter desires to ma&e use of his ri%ht of redemption. (he law does not favour co-ownership.

(he provision has been construed to mean that after the courts have decided by a final or e$ecutory )ud%ment that the contract is a pacto de retro and not a mort%a%e" the vendor *whose claim as mort%a%or has definitely been re)ected+ may still have the privile%e of repurchasin% within 30 days. Art. 1602. The contract (either contract of sale or contract of sale with right to repurchase) shall be presumed to be an equitable mortgage (equitable for the protection of the propert owner. !quit demands that the contract is not sale but mortgage) " in an of the following cases (or instances)#

(1) $hen the price of a sale with right to repurchase is usuall unusuall inadequate or grossl inadequate%
(2) $hen the &endor remains in possession as lessee or

otherwise (such as usufructuar )% (') $hen upon or after the e(piration of the right to repurchase another instrument e(tending the period of redemption or granting a new period is e(ecuted% ()) $hen the purchaser retains for himself a part of the

purchase price% (*) $hen the &endor binds himself to pa real propert ta() on the thing sold%
(6) +n an

the ta(es (such as

other case (such as when the contract of sale or

contract of sale with right to repurchase was e(ecuted pursuant to an e(isting debt of the &endor or &endor a retro in fa&or of the &endee or &endee a retro)where it ma be fairl inferred that the

real intention of the parties is that the transaction shall secure the pa ment of a debt or the performance of an other obligation. +n an of the foregoing cases" an mone " fruits or other benefit to be recei&ed b the &endee as rent or otherwise shall be considered as interest which shall be sub,ect to the usur laws. ,ne which althou%h lac&in% in some formality" form or words" or other re!uisites demanded by a statute nevertheless reveals the intention of the parties to char%e a real property as security for a debt" and contains nothin% impossible or contrary to law.