G.R. No. L-15178; October 31, 1960
ROSENDO FERNANDEZ, ET AL., plaintiffs-appellants, vs. CATALINO V. FERNANDEZ, defendant-appellee.

FACTS

On October 10, 1932, Patricio Fernandez (predecessor-in-interest of the plaintiffs) executed a sale with pacto de retro over a fishpond in favor of Catalino Fernandez for P160, redeemable within four years. Patricio never redeemed the property. On November 14, 1953, Catalino filed an application for registration of the land in his name. The heirs of Patricio opposed the application and filed a separate civil case to quiet title, claiming the contract was merely an equitable mortgage. After a joint trial, the trial court declared the contract an equitable mortgage. On appeal, the Court of Appeals reversed this judgment, declared the contract a true sale with right to repurchase, affirmed Catalino as the absolute owner, and ordered the land registered in his name. This judgment became final on September 25, 1958. Subsequently, on October 24, 1958, the heirs filed the present complaint, alleging a right to repurchase under the last paragraph of Article 1606 of the New Civil Code and that they had offered to redeem the land since September 26, 1953, but were refused. The defendant moved to dismiss, arguing the action was barred by the prior final judgment of the Court of Appeals and that his ownership had vested before the New Civil Code took effect. The lower court sustained the motion and dismissed the complaint.

ISSUE

Whether the plaintiffs-appellants can exercise the right to repurchase under Article 1606 of the New Civil Code.

RULING

No. The Supreme Court affirmed the dismissal of the complaint. It held that the right to repurchase had expired in 1936, long before the effectivity of the New Civil Code. Applying Article 1606 of the New Code to allow repurchase would impair the vested right of ownership that had already consolidated in the defendant-vendee under the provisions of the old Code. The Court cited precedent (Siopongco vs. Castro and De la Cruz vs. Muyot) establishing that Article 1606 cannot be applied retroactively to revive an expired right of repurchase. The final judgment of the Court of Appeals, which ordered registration in the defendant’s name without reserving any redemption right under Article 1606, merely confirmed that the defendant’s ownership had vested upon the expiration of the redemption period in 1936. The Court also noted that any action to question the transaction or recover the land was extinguished by prescription ten years after consolidation of ownership in 1936.