G.R. No. L-51824, 7 February 1992, 206 SCRA 52
A fishery lot, encompassing an area of 9.4 hectares and designated as Lot No. 518-A of the Cadastral Survey of Dumangas, Iloilo, was previously covered by Fishpond Permit No. F-2021 issued in the name of Anecita Dionio. Upon Anecita’s death, her heirs, petitioner Diamante and Primitivo Dafeliz, inherited the property which they later divided between themselves; petitioner got 4.4. hectares while Dafeliz got 5 hectares. It is the petitioner’s share that is the subject of the present controversy. Primitivo Dafeliz later sold his share to private respondent.
On 21 May 1959, petitioner sold to private respondent his leasehold rights over the property in question for P8,000.00 with the right to repurchase the same within three (3) years from said date. On 16 August 1960, private respondent filed an application with the Bureau of Fisheries, dated 12 July 1960, for a fishpond permit and a fishpond lease agreement over the entire lot, submitting therewith the deeds of sale executed by Dafeliz and the petitioner. Pressed by urgent financial needs, petitioner, on 17 October 1960, sold all his remaining rights over the property in question to the private respondent for P4,000.00. On 25 October 1960, private respondent, with his wife’s consent, executed in favor of the petitioner an Option to Repurchase the property in question within ten (10) years from said date, with a ten-year grace period.
Private respondent submitted to the Bureau of Fisheries the definite deed of sale; he did not, however, submit the Option to Repurchase. Thereafter, on 2 August 1961, the Bureau of Fisheries issued to private respondent Fishpond Permit No. 4953-Q; on 17 December 1962, it approved FLA No. 1372 in the latter’s favor. On 11 December 1963, petitioner, contending that he has a valid twenty-year option to repurchase the subject property, requested the Bureau of Fisheries to nullify FLA No. 1372 insofar as the said property is concerned. On 18 December 1964, his letter-complaint was dismissed.
Whether or not conventional redemption applies to this case.
We hold, however, that the respondent Secretary gravely erred in holding that private respondent’s non-disclosure and suppression of the fact that 4.4 hectares of the area subject of the application is burdened with or encumbered by the Option to Repurchase constituted a falsehood or a misrepresentation of an essential or material fact which, under the second paragraph of Section 29 of Fisheries Administrative Order No. 60 earlier quoted, “shall ipso facto cause the cancellation of the permit or lease.” In short, the Secretary was of the opinion that the Option to Repurchase was an encumbrance on the property which affected the absolute and exclusive character of private respondent’s ownership over the 4.4 hectares sold to him by petitioner. This is a clear case of a misapplication of the law on conventional redemption and a misunderstanding of the effects of a right to repurchase granted subsequently in an instrument different from the original document of sale.
Article 1601 of the Civil Code provides:
Conventional redemption shall take place when the vendor reserves the right to repurchase the thing sold, with the obligation to comply with the provisions of article 1616 and other stipulations which may have been agreed upon.
In Villarica, et al. vs. Court of Appeals, et al., 4 decided on 29 November 1968, or barely seven (7) days before the respondent Court promulgated its decision in this case, this Court, interpreting the above Article, held:
The right of repurchase is not a right granted the vendor by the vendee in a subsequent instrument, but is a right reserved by the vendor in the same instrument of sale as one of the stipulations of the contract. Once the instrument of absolute sale is executed, the vendor can no longer reserve the right to repurchase, and any right thereafter granted the vendor by the vendee in a separate instrument cannot be a right of repurchase but some other right like the option to buy in the instant case. . . .
*Case digest by Claudette Anne G. Sayson, JD – 4, Andres Bonifacio College, SY 2019 – 2020