MISTERIO v.

CEBU STATE COLLEGE OF SCIENCE AND

TECHNOLOGY
June 23, 2005 |Calleja, Sr., J. | Pacto de Retro Sale
Digester: Angat, Christine Joy F.
SUMMARY: Asuncion Sadaya-Misterio and Sudlon Agricultural
High School entered into a Deed of Sale over a parcel of land. The
sale was subject to Asuncions right to repurchase the property
after the high school shall have ceased to exist, OR 2) shall have
transferred its site elsewhere. In 1983, BP 412 was enacted, which
consolidated vocational schools, including SAHS, and made them
an extension of CSCST. In 1998, the heirs of Asuncion wanted to
exercise their right to redeem the property, on the ground that
SAHS has ceased to exist. The Court held that the action has
prescribed, as when there is no period provided for the exercise of
such right, the right to redeem should be exercised within 4 years
from the happening of the allocated condition.
DOCTRINE: The essence of a pacto de retro sale is that title and
ownership of the property sold is immediately vested in the
vendee a retro, subject to the restrictive condition of repurchase
by the vendor a retro within the period provided in Article 1606 of
the New Civil Code. The failure of the vendor a retro to repurchase
the property vests upon the latter by operation of law the absolute
title and ownership over the property sold.
FACTS:
1952: The Provincial Board of Cebu granted to Sudlon
Agricultural High School (SAHS), the usufruct of 41 parcels of
land covering 104.5441 ha of the Banilad Friar Lands Estate.
December 31, 1956: Asuncion Sadaya-Misterio executed a
Deed of Sale over a parcel of land (which was also a part of the
Banilad Friar Lands Estate) in favor of SAHS. The sale was
subject to the right of Misterio to repurchase the property 1)
after the high school shall have ceased to exist, OR 2) shall
have transferred its site elsewhere.
o The right of the vendor (Misterio) to repurchase the
property was annotated at the dorsal portion of the TCT.
The Provincial Board of Cebu, through a resolution, donated
the aforementioned 41 lots to SAHS, subject to 2 conditions:
(1) that if SAHS ceases to operate, the ownership of the lands
would automatically revert to the province, and (2) that SAHS
could not alienate, lease, or encumber the properties.
June 10, 1983: B.P. 412 was enacted, which consolidated as
one school system certain vocational schools in the province

of Cebu, including SAHS, and which became an extension of

the Cebu State College of Science and Technology (CSCST).
Cebu decided to recover the 41 lots it had earlier donated on
the ground that SAHS had no personality to accept the
donation. When the heirs of Asuncion Misterio, who had then
died intestate, learned that the province of Cebu was trying to
recover its donated property, they informed the province on
August 19, 1998 of their intention to exercise their right to
repurchase the property as stipulated in the Deed of Sale.
o The province of Cebu and CSCST settled their issue over
the lots by entering into a Memorandum of Agreement
where the lots were partitioned 43 ha goes to the
province while 51 ha goes to the SAHS (now part of the
CSCST).
March 19, 1990: The Misterio heirs then sent a letter to CSCST
informing their intention to exercise the option to repurchase,
on the ground that SAHS had ceased to exist.
o CSCST denied the claim, stating that SAHS still existed,
albeit it changed its name [to CSCST] and expanded its
offerings [which now included collegiate courses].
The Misterio heirs then filed a complaint before the RTC for
Nullity of Sale and/or Redemption, alleging:
o That SAHS had no juridical personality of its own at the
time of the sale, therefore the sale was null and void
o And that assuming the sale was valid, the enactment of BP
412 abolished SAHS and converted it to become part of
CSCST, therefore rendering the operative condition
granting the vendor and her heirs the right to redeem
After the cases preliminary conference, the trial court issued a
pre-trial order defining the issues:
o Whether SAHS has still retained its personality as such
school or it had ceased to exist
o Whether the Misterio heirs have the right to exercise the
right of redemption over the property
RTC ruled in favor of the Misterio heirs
o The sale between Asuncion and SAHS is null and void for
latters lack of juridical personality to acquire real
property
o With the enactment of BP 412, SAHS ceased to exist and
to operate (under the Corporation Code, the constituent
corporations SAHS and CSCST became one through
merger or consolidation, with CSCST as the surviving
entity), hence, the Misterio heirs can exercise their right
to redeem

The OSG, representing the CSCST, appealed. Pending the

appeal, the CSCST, through a Deed for Reversion, deeded the
property to the province of Cebu.
CA reversed the RTC
o The RTC erred in not confining itself to the issues
defined by the parties during pre-trial
o While SAHS had ceased to exist when BP 412 took effect,
the period for the petitioners to repurchase the property
expired on June 1987, four years after the enactment of
BP 412
Hence, the present petition by the Misterio heirs

RULING: Petition denied.

Whether the action to redeem the property has prescribed
YES.
The essence of a pacto de retro sale is that title and ownership
of the property sold is immediately vested in the vendee a
retro, subject to the restrictive condition of repurchase by the
vendor a retro within the period provided in Article 1606 of the
New Civil Code. The failure of the vendor a retro to repurchase
the property vests upon the latter by operation of law the
absolute title and ownership over the property sold.
o Art. 1606. The right referred to in Article 1601, in the
absence of an express agreement, shall last four years from
the date of the contract.
Should there be an agreement, the period cannot exceed
ten years.
However, the vendor may still exercise the right to
repurchase within thirty days from the time final judgment
was rendered in a civil action on the basis that the contract
was a true sale with right to repurchase

IN THIS CASE: Asuncion (vendor a retro) and SAHS (vendee a

retro) did not agree on any period for the exercise of the right
to repurchase the property. Following Article 1606 (1), the
said right should be exercised within four years from the
happening of the allocated condition contained in the deed:
(a) the cessation of the existence of the SAHS, or (b) the
transfer of the school to other site.
o In this case, SAHS ceased to exist in June 10, 1983, when
BP 412 took effect. The right of the Misterio heirs, as the
successors-in-interest of Asuncion (vendor a retro), started
to run and lasted until June 10, 1987. However, the
Misterio heirs expressed their intention to redeem the
property only in 1998.
Misterio heirs contend that the issue of whether SAHS is yet to
be resolved by court, hence the applicable provision is Article
1606(3). The contention is misplaced as their right to
repurchase the property was not dependent upon the prior
final interpretation of the said phrase. There is no doubt that
the Deed of Sale actually includes a right to repurchase. The
four-year period for the petitioners to repurchase the
property was not suspended merely and solely because
there was a divergence as to the precise meaning of the
phrase after the SAHS shall cease to exist.
Moreover, the fact that the right to repurchase the property is
annotated in the dorsal side of the RTC does not mean the said
right is imprescriptible. The annotation was only for the
purpose of notifying third parties of the petitioners right to
repurchase the property under the terms of the deed of sale,
and the law.