GR L 22968; (January, 1968) (Digest)
G.R. No. L-22968 January 31, 1968
BENEDICTO BALUYOT, ET AL., plaintiffs-appellees, vs. EULOGIO E. VENEGAS, defendant-appellant.
FACTS
The plaintiffs are the heirs of Crisanto Baluyot, who sold a parcel of land to the defendant on July 24, 1951. The contract of sale contained a stipulation granting the vendor, his heirs, or successors-in-interest the “option and priority to purchase” the land for the same consideration of P4,000 “at anytime after the expiration of the period of ten (10) years to be computed from October 1, 1951.” On July 18, 1963, the plaintiffs filed an action to compel the defendant to reconvey the land to them, alleging that their previous offers to exercise this right had been unavailing. The Court of First Instance of Bataan rendered judgment in favor of the plaintiffs, ordering the defendant to execute a deed of conveyance upon payment of P4,000 and to pay attorney’s fees. The defendant appealed.
ISSUE
Whether the stipulation in the contract granting the vendor the option to repurchase the land after the expiration of ten years from a specified date is valid under Article 1606 of the Civil Code.
RULING
No. The Supreme Court reversed the judgment of the lower court and dismissed the complaint. The stipulation is void and contrary to law. Article 1606 of the Civil Code provides that if there is an agreement on the period for repurchase, it cannot exceed ten years from the date of the contract. In this case, the contract, executed in July 1951, stipulated that the right to repurchase could only be exercised after the expiration of ten years from October 1, 1951. This meant the right would arise only after more than ten years from the date of the contract, which is prohibited by Article 1606 as it exceeds the maximum allowable period. The Court, citing the precedent of Santos vs. Heirs of Crisostomo and Tiongson, held that such a stipulation is illicit because it attempts to allow the exercise of the right after the ten-year limit set by law and, in effect, suppresses the right during the entire period when it could lawfully be exercised. The Court clarified that Article 1606 is a rule of substantive law affecting the validity of the agreed period, not a statute of limitation requiring an affirmative plea. Therefore, the right to repurchase did not validly arise, as it was interdicted by law from the outset.