G.R. No. L-17723; June 29, 1962
JOSE S. VILLALOBOS, plaintiff-appellant, vs. MANUEL CATALAN, GRACIANA JUSAIN, CLARITA CATALAN AND MANUEL GRIÑEN, defendants-appellees.

FACTS

On January 14, 1947, defendants-appellees spouses Manuel Catalan and Graciana Jusain sold two parcels of land to plaintiff-appellant Jose S. Villalobos under a pacto de retro sale, with a repurchase period of ten years. The vendors later dissuaded Villalobos from intervening in the related cadastral case, promising to transfer the certificates of title to him if no repurchase occurred. In 1958, Villalobos discovered that the vendors had instead sold the properties to their daughter, Clarita Catalan, who obtained a transfer certificate of title and mortgaged the land.
Villalobos filed an action in July 1958 for annulment of that subsequent sale and for damages. The defendants claimed the original transaction was a mortgage and moved to dismiss the case, asserting it had become moot because they had deposited the repurchase price with the clerk of court in July 1959. The trial court dismissed the case, applying Article 1606(3) of the new Civil Code, which allows a vendor to repurchase within thirty days from a final judgment declaring the contract a true sale with right to repurchase, even though the deposit was made long after the original ten-year redemption period had expired.

ISSUE

Whether Article 1606, paragraph 3, of the new Civil Code applies retroactively to a pacto de retro sale perfected before the Code’s effectivity, where the stipulated redemption period expired after the Code became operative.

RULING

No. The Supreme Court reversed the order of dismissal and remanded the case for trial. The legal logic is anchored on the protection of vested rights and the non-retroactive application of laws that would impair such rights. The Court held that under the old Civil Code, the vendee’s (Villalobos) right of ownership became absolute and vested immediately upon the vendors’ failure to redeem within the stipulated ten-year period, which expired in 1957. Article 1606(3) of the new Civil Code, which grants a vendor a new 30-day period to repurchase from the date of a final judgment, constitutes a new right that did not exist under prior law.
Applying the transitional provision of Article 2253, such a new right can be given immediate effect for acts occurring under prior legislation only if it does not prejudice or impair any vested right. Since Villalobos’s absolute ownership had already vested before the attempted repurchase in 1959, applying Article 1606(3) retroactively would impair that vested right by diminishing its value and subjecting it to an extended redemption privilege. The Court, citing its precedent in Siopongco vs. Castro, ruled that the new provision cannot validly impair an ownership right that had already become absolute under the former law. Therefore, the trial court erred in dismissing the case based on the untimely deposit.