De Luna v. Abrigo
REITERATIONFacts
The Antecedents: On January 24, 1965, Prudencio de Luna donated 7,500 square meters of land to Luzonian Colleges, Inc. (now Luzonian University Foundation, Inc.) subject to terms and conditions, including automatic reversion upon violation. The foundation failed to comply. On April 9, 1971, Prudencio de Luna "revived" the donation with new conditions, including the construction of a chapel, nursery, and kindergarten school within five years, and again stipulated for automatic reversion upon violation. The foundation accepted. A Deed of Segregation was executed on August 3, 1971, adjudicating the donated portion to the foundation. Procedural History: On September 23, 1980, the heirs of Prudencio de Luna (who died on August 18, 1980) filed a complaint for cancellation of the donation and reversion of the land, alleging non-compliance with the conditions. The foundation claimed substantial compliance and an indefinite extension granted by the donor. The foundation moved for dismissal based on prescription. The Regional Trial Court (RTC) of Quezon, Branch IX, dismissed the complaint on July 7, 1981, holding that the action for revocation prescribed under Article 764 of the Civil Code within four years from non-compliance, which expired on April 9, 1980. The Petition: The heirs filed a petition for review on certiorari, arguing that the RTC erred in applying Article 764 and in dismissing the complaint, contending that the action was to enforce a written contract with a ten-year prescriptive period, and that the stipulation for automatic reversion did not require judicial intervention.
Issue(s)
Whether the RTC erred in dismissing the complaint on the ground of prescription. Whether the donation is an onerous donation governed by the rules on contracts. Whether the stipulation for automatic reversion upon non-compliance requires judicial intervention. Whether the action filed was for revocation under Article 764 of the Civil Code or to enforce a written contract.
Ruling
The petition is granted. The assailed order of dismissal is set aside, and Civil Case No. 8624 is ordered reinstated. The RTC is directed to conduct a trial on the merits.
Ratio Decidendi
On the prescriptive period for revocation: The RTC erred in applying Article 764 of the Civil Code, which provides a four-year prescriptive period for actions to revoke donations due to non-compliance. This provision is applicable only to simple or purely gratuitous donations. For onerous donations, the general rules on prescription of actions apply, meaning the ten-year period for enforcing written contracts is relevant if the stipulation is treated as a contractual breach. On the nature of the donation and applicable law: The Court held that the donation in question was onerous, as it was subject to the burden of constructing specific buildings within a stipulated period. Citing Article 733 of the New Civil Code and established jurisprudence, the Court reiterated that onerous donations are governed by the rules on contracts, not by the specific provisions on donations concerning revocation. This distinction is crucial because it dictates the applicable prescriptive period. On automatic reversion and judicial intervention: The Court affirmed the validity of the stipulation in the "Revival of Donation Intervivos" providing for the "automatic reversion" of the donated property upon violation of the conditions, without the need for further documentation or judicial action. This stipulation, being a valid agreement between the parties and not contrary to law or public policy, grants the donor the right to rescind the contract unilaterally upon breach. However, the Court clarified that when such rescission is contested, judicial intervention is necessary not to declare the rescission, but to determine if the rescission was proper. On the prescriptive period for enforcing the contract: The petitioners' action was correctly characterized as one to enforce a written contract. The conditions of the donation were to be complied with within five years from April 9, 1971. The stipulation for automatic reversion upon non-compliance, when contested, necessitates a determination of whether the conditions were indeed violated. The ten-year prescriptive period under Article 1144(1) of the New Civil Code for actions based on a written contract applies, counted from the expiration of the period for compliance (April 9, 1976), making the complaint filed on September 23, 1980, timely.
Main Doctrine
Onerous donations are governed by the rules on contracts, and actions for revocation thereof are subject to the general rules on prescription, not the specific four-year period under Article 764 of the Civil Code, especially when the donation itself provides for automatic reversion upon non-compliance.