Central Philippine University vs. Court of Appeals

Donee (D) vs. Heirs of donor (P)
GR 112127	[T]

Summary: A donor donated a parcel of land to the donee school with a resolutory condition that a medical school be constructed thereon. Fifty years elapsed, but the donee has not complied. The heirs of the donor are now asking for rescission of the donation because of the donee's failure to comply.

Rule of Law: Under Article 1191 of the Civil Code, when one of the obligors cannot comply with the conditions, the obligee may ask for rescission and the court shall grant the same unless there is just cause authorizing the fixing of a period. In the absence of any, there is no more obstacle for the court to decree the rescission claimed.

Facts: The late Don Ramon Lopez, Sr., who was then a member of the Board of Trustees of the Central Philippine College—now Central Philippine University (CPU)—donated a parcel of land to the Central Philippine University (D) with certain conditions.

The heirs (P) of Don Ramon Lopez, Sr., filed an action for the annulment of the donation, reconveyance and damages against CPU (D) alleging that since 1939 up to the time the action was filed the latter had not complied with the conditions of the donation. The heirs (P) also alleged that CPU (D) had in fact negotiated with the National Housing Authority (NHA) to exchange the donated property with another land owned by the latter.

In its answer, CPU (D) alleged that the right of the heirs (P) to file the action had prescribed and that it did not violate any of the conditions in the deed of donation because it never used the donated property for any other purpose than that for which it was intended and it did not sell, transfer or convey it to any third party.

The trial court held that CPU (D) failed to comply with the conditions of the donation and declared it null and void. The court a quo further directed CPU (D) to execute a deed of reconveyance of the property in favor of the heirs (P) of the donor.

CPU (D) appealed the decision. The appellate court ruled that the annotations at the back of petitioner's certificate of title were resolutory conditions breach of which should terminate the rights of the donee thus making the donation revocable. Further, while the first condition mandated CPU (D) to utilize the donated property for a medical school, the donor did not fix a period within which the condition must be fulfilled, hence, until a period was fixed for the fulfillment of the condition, CPU (D) could not be considered as having failed to comply with its part of the bargain. Thus, the appellate court rendered its decision reversing the appealed decision and remanding the case to the court of origin for the determination of the time within which CPU (D) should comply with the first condition annotated in the certificate of title.

Issues: Should the resolutory condition of the deed of donation take effect and thus, extinguish the rights of donee over the donated property?

Ruling: Yes. Records are clear and facts are undisputed that since the deed of donation up to the filing of the case, CPU (D) has failed to comply with its obligation as donee. CPU (D) has slept on its obligation for an unreasonable length of time. Hence, it is only just to declare the subject donation ineffective and, for all purposes, revoked. CPU (D) as donee should now return the donated property to the heirs (P) of the donor by means of reconveyance.

A review of the conditions in the deed of donation leads to the conclusion that the donation was onerous—one executed for a valuable consideration which is considered the equivalent of the donation itself. When Don Ramon Lopez donated the parcel of land to CPU (D) but imposed an obligation upon the latter to establish a medical college thereon, the donation must be for an onerous consideration.

Under Article 1181 of the Civil Code, on conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. Thus, when a person donates land to another on the condition that the latter would build upon the land a school, the condition imposed was not a condition precedent or a suspensive condition but a resolutory one.
   —Parks vs. Province of Tarlac, 49 Phil. 142 (1926).

It is not correct to say that the schoolhouse had to be constructed before the donation became effective, that is, before the donee could become the owner of the land, otherwise, it would be invading the property rights of the donor. The donation had to be valid before the fulfillment of the condition.
   —Parks vs. Province of Tarlac, supra.

If there was no fulfillment or compliance with the condition, such as what obtains in the instant case, the donation may now be revoked and all rights which the donee may have acquired under it shall be deemed lost and extinguished.

When the obligation does not fix a period but from its nature and circumstances it can be inferred that a period was intended, the general rule provided in Article 1197 of the Civil Code applies, which provides that the courts may fix the duration thereof because the fulfillment of the obligation itself cannot be demanded until after the court has fixed the period for compliance therewith and such period has arrived.
   —Concepcion vs. People, 74 Phil. 63 (1942).

However, this general rule cannot be applied because of different circumstances. More than fifty (50) years has elapsed to allow CPU (D) to comply with the conditions, however burdensome, to make the donation forever valid in its favor. Unfortunately, it didn't. Hence, there is no need to fix the duration of a term of the obligation when such procedure would serve no purpose than to delay or lead to an unnecessary and expensive multiplication of suits.

Moreover, under Article 1191 of the Civil Code, when one of the obligors cannot comply with the conditions, the obligee ask for rescission and the court shall grant the same unless there is just cause authorizing the fixing of a period. In the absence of any, there is no more obstacle for the court to decree the rescission claimed.

Finally, since the deed of donation herein is basically a gratuitous one, doubts referring to incidental circumstances of a gratuitous contract should be resolved in favor of the least transmission of rights and interests. (Article 1378, Civil Code)
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* Keywords: resolutory obligations