Title
Cebu State College of Science and Technology vs. Misterio
Case
G.R. No. 179025
Decision Date
Jun 17, 2015
Heirs sought to repurchase land sold to a school, claiming cessation triggered redemption rights. SC ruled redemption right expired; transfer of school site did not revive it.
right to repurchase
dismissal of complaint
exercise of right

Case Summary (G.R. No. 179025)

Factual Background: The Deed of Sale and Its Conditions

On December 31, 1956, Asuncion Sadaya executed a Deed of Sale over Lot 1064 (4,563 square meters) located at Lahug, Cebu City, covered by TCT No. 13086, in favor of Sudlon Agricultural High School (SAHS). The sale included an explicit condition that gave the vendor a right to repurchase after SAHS had ceased to exist or after SAHS had transferred its school site elsewhere. The deed required that SAHS use the lot for school purposes only, and obligated the repurchase by paying P9,130.00 to the vendee.

Following the execution of the deed, TCT No. 13086 was cancelled on May 22, 1957, and TCT No. 15959 was issued in SAHS’s name, with the vendor’s repurchase right annotated on its dorsal portion.

Later, on March 18, 1960, the Provincial Board of Cebu donated 41 parcels of land to SAHS, subject to conditions that the land would revert to the province if SAHS ceased to operate and that SAHS could not alienate, lease, or encumber the properties.

Legislative Consolidation: SAHS and the Creation of CSCST

On June 10, 1983, BP Blg. 412, entitled “An Act Converting the Cebu School of Arts and Trades in Cebu City into a Chartered College … Expanding its Jurisdiction and Curricular Programs,” took effect. It consolidated and incorporated multiple schools, including SAHS, as part of CSCST. The statute also transferred personnel, properties, records, obligations, monies, and appropriations of the incorporated schools to CSCST.

This legislative event became central to respondents’ repurchase claim, because it allegedly caused SAHS to cease to exist for purposes of the deed’s first suspensive condition.

Efforts to Repurchase and the First Litigation

The Province of Cebu earlier sought to recover the donated lands on the theory that SAHS had no personality to accept the donation. In August 19, 1988, respondents—heirs of Asuncion Sadaya—communicated to the Governor of Cebu their intention to repurchase under the deed, asserting that SAHS had ceased to exist or would no longer satisfy the contractual requirement.

On March 13, 1990, respondents, through counsel, informed petitioner of their intention to exercise the right to repurchase. Respondents were told by petitioner’s superintendent that SAHS still existed but that only the school’s name had changed.

On December 23, 1993, respondents filed a Complaint for Nullity of Sale and/or Redemption before the RTC of Cebu City, Branch 18, docketed as Civil Case No. CEB-15267, against CSCST and its officers. They alleged, among others, that SAHS had no juridical personality at the time of the deed’s execution and thus could not acquire property, rendering the deed void; and that with the enactment of BP Blg. 412, SAHS had ceased to exist, thereby activating their right to repurchase.

The RTC rendered judgment in respondents’ favor on November 29, 1995, declaring the deed null and void and ordering CSCST, as possessor of the land, to deliver and reconvey upon payment of the purchase price.

CSCST appealed. During the pendency of the appeal, respondents filed a Manifestation and Motion for Injunction in the CA, alleging facts indicating CSCST’s intent to abandon the disputed land and transfer its school site, and the CA acknowledged this development in a resolution dated September 13, 1999.

Meanwhile, on October 3, 1997, petitioner and the Province of Cebu executed a Deed for Reversion, by which petitioner ceded the subject property to the Province. This resulted in the issuance of TCT No. 146351 in the Province’s name, with a notice annotated about the pending cases before the RTC and the CA.

When the appeal reached the CA, the CA reversed the RTC’s decision on July 31, 2000, holding that while SAHS had indeed ceased to exist upon the effectivity of BP Blg. 412, respondents’ right to repurchase was barred by prescription because it expired in June 1987, four years from the effectivity of BP Blg. 412 under Article 1606. The CA reasoned that the four-year period was not suspended by disputes over the interpretation of “after SAHS shall have ceased to exist.”

Respondents sought further review, but on June 23, 2005, the Supreme Court affirmed the CA, holding that under the deed’s condition and Article 1606, the repurchase period began on June 10, 1983 and ended on June 10, 1987, and respondents failed to repurchase within the statutory period. The Court also ruled that the divergence of views regarding the contractual phrase did not suspend the running of prescription because the existence of the right to repurchase did not depend on a prior final judicial interpretation.

The Second Complaint and Its Dismissal

Despite the adverse ruling, on February 5, 2001, while the appeal was still pending before the Supreme Court, respondents filed an Amended Complaint with the RTC of Cebu City, Branch 23, docketed as Civil Case No. CEB-25746. They impleaded the Province of Cebu and the Register of Deeds, and alleged that after CSCST transferred its school site to another location, the second suspensive condition in the deed was triggered. They relied on claims of newspaper reports about SAHS’s transfer to Barili, Cebu, a memorandum of agreement facilitating the transfer, and a deed of reversion showing that ownership had already been transferred to the Province, thereby prompting respondents to seek cancellation of the title.

In its Answer, petitioner argued that respondents waived the ground of school-site transfer by failing to include it in the earlier complaint in Civil Case No. CEB-15267; that respondents split a single cause of action; that the case was dismissible for litis pendentia; that respondents engaged in forum shopping; and that the action was likewise barred by prescription.

On October 1, 2002, the RTC dismissed the Amended Complaint. It held that respondents’ present suit for redemption, cancellation of title, and damages was barred by litis pendentia because another case between the same parties for the same cause was pending, and it also found forum shopping due to substantial identity of parties, rights of action, and relief sought in the earlier case still pending before the CA.

The Court of Appeals’ Reversal

On appeal, the CA reversed. It concluded that litis pendentia did not apply because, although identity of parties and reliefs existed, there was no identity of causes of action. The CA emphasized that the deed of sale provided two suspensive conditions for the right to repurchase: (one) SAHS’s cessation of existence, and (two) SAHS’s transfer of its school site elsewhere.

In the first case (Civil Case No. CEB-15267, later docketed as CA-G.R. CV No. 53592), respondents’ cause of action was anchored on the first condition, i.e., SAHS’s cessation of existence due to BP Blg. 412. In the second case, respondents’ cause of action rested on the second condition, i.e., the actual relocation of the school site. The CA thus held that while the reliefs sought were similar, the factual foundations were different, and the causes of action were not identical.

Consequently, the CA remanded the case for further proceedings.

The Parties’ Contentions Before the Supreme Court

CSCST sought reversal, arguing that the CA erred in setting aside the RTC order dismissing the case. It maintained that the second complaint was barred by litis pendentia and res judicata because the elements of those doctrines were present, and it further invoked forum shopping. It also contended that respondents lacked a cause of action because the asserted school-site transfer did not amount to the contractual trigger that would justify redemption. It explained that its transfer of the school site to expand services for students remained aligned with the educational purpose for which the contract of sale was executed.

Supreme Court’s Ruling on Litis Pendentia, Res Judicata, and Forum Shopping

The Supreme Court granted the petition. It first agreed that the CA committed no reversible error in reversing the RTC’s dismissal on litis pendentia and res judicata grounds, because the two complaints did not share identity of cause of action or rights asserted.

Applying the governing tests, the Court reiterated that litis pendentia requires, among others, identity of parties, identity of rights and reliefs founded on the same facts, and such identity of cases that a judgment in one would amount to res judicata in the other. It similarly stated the requisites for res judicata, including the presence of a final judgment on the merits and identity of parties, subject matter, and causes of action.

The Court then analyzed the deed of sale’s structure. It noted that the right to repurchase was governed by two distinct suspensive conditions. In the first cause of action, respondents centered their case on SAHS’s cessation of existence and the legal consequences of BP Blg. 412 on SAHS’s corporate existence. In the second cause of action, respondents had to establish that SAHS moved its school site to a location other than the subject property. The Court thus held that the same relief sought did not control if the factual predicates differed. Under the evidentiary test—whether the same evidence would support both causes of action—the first and second causes depended on different facts and required different proof. Accordingly, identity of causes of action was absent.

Conventional Redemption and the Statutory Time Limits Under Article 1606

Even with that conclusion, the Supreme Court ruled that respondents’ second complaint still failed. The Court treated the redemption as a form of conventional redemption arising from a vendor a retro reserving the right to repurchase under the sale. As such, the Court held that the parties had to observe the limits established by Article 1606 of the New Civil Code.

The Court recounted that Article 1606 provides that in the absence of an express agreement on the redemption period, the right lasts four years from the date of the contract, and that even i

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