Question

John and Mary were in a relationship for seven years. They decided to buy a property together and contributed equally to the purchase price. The property was registered under their names as co-owners. However, due to personal differences, John and Mary decided to end their relationship and agreed to sell the property.

During the process of selling the property, a new law was enacted which imposed additional taxes on the sale of real estate properties. The law explicitly stated that it shall have retroactive effect, applying to all sales made from the date of its enactment.

John argues that the new law should not be applied to their sale since it would violate their vested rights as they entered into the purchase agreement before the law was enacted. On the other hand, Mary believes that the retroactive application of the new law is justified to ensure equal taxation and fairness among all real estate transactions.

Discuss the application of the principle of retroactivity of laws to the sale of John and Mary's property. Cite relevant provisions of the Civil Code, particularly Article 4, and analyze its effect on their vested rights as co-owners of the property.