JOSE S. VILLALOBOS, PLAINTIFF AND APPELLANT, VS. MANUEL CATALAN, GRACIANA HUSAIN, CLARITA CATALAN AND MANUEL GRINEN, DEFENDANTS AND APPELLEES.

In this appeal from an order of dismissal issued by the Court of
First Instance of Iloilo in its Civil Case No. 4907, the issue is
whether Article 1606, paragraph 3, of the Civil Code of the Philippines
applies to pacto de retro sales perfected before the
effectivity of said Code, but having a redemption period that expired
after the Code became operative.

The facts appear from the pleadings to be as follows:

On January 14, 1947, the appellees, spouses Manuel Catalan and
Gracxana Husain, sold, with right of repurchase, to appellant, Jose S.
Villalobos, two parcels of land, designated as Lots Nos. 4019 and 4024
of the Cabatuan (Iloilo) Cadastre, stipulating that the sellers would
have the right of repurchase within 10 years from the date of sale.
During the hearing of the cadastral case, the vendors-applicants (now
appellees) dissuaded the vendee Villalobos from intervening therein,
upon promise that the certificates of title would be transferred to his
name if no repurchase were made. Subsequently, in 1958, Villatobos
discovered that the vendors had, without his knowledge, sold the
properties to their daughter, appellee Clarita Catalan, married to
Manuel Grinen; that a Transfer Certificate of Title (No. T-19413) had
been already issued to the latter; and that the land had been mortgaged
to a bank. Wherefore, Villalobos brought action in the court below, on
July 14,1958, charging appellees with fraud and bad faith, and asking
for the annulment of the sale made by the Catalan spouses to their
daughter, and of the Jatter’s Transfer Certificate of Title; that
appellees be required to recognize appellant’s title and be made to pay
damages and costs, The answer interposed the defense that the alleged
sale a retro was in fact a mortgage; that in 1957, the
daughter Clarita Catalan had offered to pay the repurchase price, and
that when the appellant refused to accept it, she deposited the amount
with the Clerk of the Court of First Instance of Iloilo.

When the case was called for trial, defendants (now appellees)
orally moved to dismiss the case, “on the ground that it had become
moot because the defendants had already deposited the amount of P1, 500
with the Clerk of Court on 21 July 1959”, and plaintiff had refused to
take delivery thereof.

Over plaintiff’s objection that such payment was made long after the
expiration of the redemption period stipulated, the trial court
dismissed the case, by order of February 8, 1960 (Rec. on Appeal, pp.
37-39), ruling that payment was timely under Article 1606, paragraph 3,
of the new Civil Code, which provides:

“However, the vendor may still exercise the right to
repurchase within thirty days from the time final judgment was rendered
in a civil action on the basis that the contract was a true sale with
right to repurchase.”

Reconsideration having been refused, plaintiff Villalobos appealed directly to this Court.

The court below opined, and appellees reiterate here, that when the
new Civil Code of the Philippines became operative in 1950, appellant’s
right to the land was still a mere expectancy, because their redemption
period had not expired; that consequently, the right of appellant was
subordinated to the vendor’s right to redeem under Article 1606,
paragraph 3. It is averred that said article conferred upon the vendors
(appellees) a new right which did not exist under the previous
legislation, and that such new right operated retrospectively under the
later part of Article 2253 (Transitional Provisions) of the present
Code:

“ART. 2253. * * * But if a right should be declared
for the first time in this Code, it shall be effective at once, even
though the act or event which gives rise thereto may have been done or
may have occurred under the prior legislation, provided said new right
does not prejudice or impair any vested or acquired right, of the same
origin.”

This stand of the appellees, sustained by the court below, is erroneous and untenable. The original sale a retro
did not confer upon the purchaser (appellant Villalobos) a mere
expectancy but an actual right of ownership of the property sold, that
would continue to exist indefinitely unless the vendors exercised in
due time their right of redemption. This right of ownership, already
became vested in appellant in 1947 and could not be defeated by the new
right created by Article 1606, since the Code itself expressly so
declares (Article 2253, last sentence, jam quot.). Appellant’s vested right of ownership, it is true, was subject to a resolutory condition, the timely redemption by the vendors a retro (Aquino vs.
Deala, 63 Phil., 582). Such being the case, the applicable rule is not
Article 2253 of the new Code, which is general, but the specific one of
Article 2255, providing that conditional rights continue to be subject
to the law formerly in force.

“ART. 2255. The former laws shall regulate acts and
contracts with a condition or period, which were executed or entered
into before the effectivity of this Code, even though the condition or
period may still be pending at the time this body of laws goes into
effect.”

Consistently with this view, this Court has ruled, in Siopongco vs. Castro, G. R. No. L-12167, promulgated 29 April 1959, as follows:

“This leads to the question whether Siopongco could
invoke Art. 1606 of the New Civil Code and demand ‘the right to
repurchase within 80 days from the tame final judgment is rendered in
this action’ on the basis of a true conventional redemption contract.

On this, point, we think he may not exercise such right, because ownership had vested in the Castros before the approval of
said Code, ownership which this statute obviously did not-and could not
validly-impair by permitting the former owner to reacquire the land he
had previously conveyed to another.”

If under the old Civil Code of 1889 (Art. 1509; Basilio vs.
Encarnacion, 5 Phil., 360) the plaintiff’s right of ownership became
absolute immediately upon failure of the vendors to redeem in due time,
certainly that right would be impaired, and its value diminished, to
his prejudice, if the vendors were now to be given the privilege to
redeem beyond” the period stipulated.

It was, therefore, error to dismiss this case without inquiry into the issues framed by the pleadings.

In view of the foregoing, the order of dismissal appealed from is
set aside, and the records are ordered remanded to the court of origin
for trial and decision on the merits. Costs against appellees.

Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.