Case Summary (G.R. No. 169190)
Property and Original Contractual Terms
The Deed of Sale transferred Lot 1064, Cebu City, consisting of 4,563 square meters, to SAHS for P9,130.00, subject to the vendor’s (Sadaya’s) right of repurchase. The right to repurchase was conditioned upon either the SAHS ceasing to exist or transferring its school site elsewhere. This condition was specifically annotated on the corresponding land title (TCT No. 15959).
Historical Developments and Legal Background
In 1960, the Cebu Provincial Board donated several parcels of land to SAHS with reversion conditions attached, prohibiting alienation or encumbrances and ensuring reversion to the province upon cessation of SAHS operations. In 1983, Batas Pambansa (BP) Blg. 412 converted and consolidated SAHS and other educational institutions into the CSCST, effectively abolishing SAHS as a separate entity and transferring its properties and liabilities to CSCST.
Respondents' Assertion of Right to Repurchase
Respondents, as heirs of Sadaya, communicated their intent in 1988 and 1990 to exercise their repurchase right based on the condition that SAHS had ceased to exist under BP Blg. 412. CSCST contended that SAHS continued to exist under a different name, prompting litigations.
Initial RTC Decision and Subsequent Appeals
In 1995, the Regional Trial Court (RTC) ruled the original Deed of Sale null and void, holding that SAHS had no juridical personality and that respondents retained their right to repurchase. The RTC ordered CSCST to reconvey the property upon payment. CSCST appealed to the Court of Appeals (CA), which reversed in 2000, ruling respondents’ right to repurchase had prescribed as per Article 1606 of the New Civil Code, setting a four-year period for exercising such rights starting in 1983 when SAHS ceased to exist.
Supreme Court's Earlier Ruling on Prescription
The Supreme Court, in 2005, affirmed the CA’s decision, holding that the right to repurchase was subject to a four-year prescription period. Respondents failed to repurchase the property within that period following SAHS’s dissolution under BP Blg. 412, thus barring their claim.
New Litigation and RTC’s Dismissal
Respondents later filed a second complaint in 2001, based on the second suspensive condition: the transfer of SAHS’s school site to another location. They alleged that CSCST’s transfer of the property to the Province of Cebu triggered their right to repurchase. The RTC dismissed this case on the grounds of litis pendentia and forum shopping because the earlier case was pending and involved the same parties and property.
Court of Appeals’ Reversal on Litis Pendentia
The CA reversed the RTC’s dismissal, distinguishing the two cases by their different causes of action. The first complaint was based on SAHS ceasing to exist, while the second complaint was predicated on the alleged transfer of the school site. Despite identity of parties and reliefs, the CA held there was no identity of causes of action because different facts and suspensive conditions triggered each right to repurchase.
Legal Issues Raised by Petitioner
Petitioner argued that:
- The second complaint was barred by litis pendentia (or res judicata) and forum shopping because it involved the same parties, property, and reliefs as the first complaint.
- The second complaint lacked a cause of action as the transfer of the school site did not constitute cessation of use but an expansion of educational services, thus not triggering the repurchase condition.
Supreme Court’s Analysis on Litis Pendentia and Res Judicata
The Court emphasized the requisites for litis pendentia:
- Identity of parties and interests;
- Identity of rights and reliefs founded on the same facts; and
- Identity of the two cases such that judgment in one would be res judicata in the other.
For res judicata, the following are required:
- Final judgment;
- Jurisdiction of the court;
- Decision on the merits; and
- Identity of parties, subject matter, and causes of action.
The Court stated that the two complaints had different causes of action because each was founded on distinct suspensive conditions (cessation of SAHS vs. transfer of school site). The evidence necessary to prove each cause was different, and thus, the cases were not barred by litis pendentia.
Application of Article 1606 of the New Civil Code and Jurisprudence on Right to Repurchase
The Court reaffirmed that under Article 1606, the right of repurchase (conventional redemption) lasts four years from the contract date unless expressly extended by agreement, which cannot exceed ten years. The Court cited established jurisprudence to emphasize that indefinite or perpetual repurchase rights are against public policy as they cause uncertainty in property ownership and tenure.
The Court explained that public policy limits the exercise of the right of repurchase to a maximum decade-long period to prevent perpetual uncertainty over property titles. This limitation is crucial to prevent circumvention through multiple suspensive conditions.
Effect of the Second Suspensive Condition and Timing of Repurchase Rights
While the occurr
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Factual Background and Parties Involved
- On December 31, 1956, Asuncion Sadaya, mother of the respondents, executed a Deed of Sale of Lot 1064 in Lahug, Cebu City (4,563 sq.m.), covered by Transfer Certificate of Title (TCT) No. 13086, in favor of Sudlon Agricultural High School (SAHS).
- The sale was subject to a suspensive condition granting the vendor (Sadaya) the right to repurchase the property after SAHS ceased to exist or transferred its school site elsewhere, for the original price of ₱9,130.
- The original TCT No. 13086 was cancelled and replaced by TCT No. 15959 in the name of SAHS on May 22, 1957, with the vendor's right to repurchase annotated.
- In 1960, the Cebu Provincial Board donated 41 parcels of land to SAHS, subject to conditions: automatic reversion to the province if SAHS ceased and prohibitions on alienation, leasing, or encumbrance.
- Batas Pambansa Blg. 412 (effective June 10, 1983) converted Cebu School of Arts and Trades (including SAHS) into the Cebu State College of Science and Technology (CSCST), transferring all properties including the land in dispute.
- Respondents are heirs of Asuncion Sadaya and notified their intention to repurchase in 1988 and 1990, asserting the right upon cessation of SAHS.
- Petitioner CSCST denied SAHS ceased to exist, asserting only a change in name.
Procedural History
- Respondents filed Civil Case No. CEB-15267 in 1993 for nullity of sale and/or redemption on the basis that SAHS lacked juridical personality and subsequently ceased to exist under BP 412.
- The Regional Trial Court (RTC) ruled in favor of respondents in 1995, declaring the Deed of Sale null and void for lack of juridical personality or cessation of SAHS, ordering CSCST to reconvey.
- Petitioner appealed to the Court of Appeals (CA).
- During appellate proceedings, respondents filed a Manifestation and Motion for Injunction in 1996 adding allegations of petitioner’s intent to abandon the property and transfer the school site.
- Petitioner and Cebu Province executed a Deed for Reversion on October 3, 1997, transferring ownership to the Province; TCT No. 146351 was issued with annotations of pending cases.
- In 2000, the CA reversed the RTC decision, ruling that respondents’ right to repurchase had prescribed by June 1987, applying Article 1606 of the Civil Code.
- The Supreme Court affirmed CA's ruling in 2005, holding the four-year redemption period started on June 10, 1983 (BP 412 effectivity).
- In 2001, respondents filed a second case (Civil Case No. CEB-25746) for redemption based on transfer of the school site, impleading the Province and Register of Deeds.
- The RTC dismissed the second case in 2002, citing litis pendentia, forum shopping, and prescription.
- The CA reversed the RTC dismissal in 2007, ruling no identity of causes o