Central Philippine University v. Franco
REITERATIONFacts
The Antecedents: In 1939, Don Ramon Lopez, Sr., a member of the Board of Trustees of Central Philippine College (now Central Philippine University [CPU]), executed a deed of donation in favor of the school for a parcel of land. The donation was subject to several conditions: the land must be used exclusively for a medical college, it cannot be sold or encumbered, and it must be named 'Ramon Lopez Campus' with a cornerstone erected. CPU accepted the donation, and the title was issued in its name with these conditions annotated. However, for fifty (50) years, CPU failed to establish the medical college and even negotiated with the National Housing Authority (NHA) to exchange the property. Procedural History: On May 31, 1989, the heirs of Don Ramon Lopez, Sr. filed an action for annulment of donation, reconveyance, and damages against CPU, alleging non-compliance with the conditions. The Regional Trial Court (RTC) of Iloilo City ruled in favor of the heirs, declaring the donation null and void and ordering reconveyance. On appeal, the Court of Appeals (CA) reversed the RTC, ruling that while the conditions were resolutory, the donor failed to fix a period for compliance. The CA remanded the case to the RTC to fix a period within which CPU should establish the medical college. The Petition: CPU filed a petition for review on certiorari under Rule 45, arguing that the conditions were onerous and resolutory, that the action had already prescribed, and that the CA erred in remanding the case to fix a period. CPU maintained that it had not violated the conditions because it never used the property for any other purpose and that the establishment of a medical college was dependent on various external factors.
Issue(s)
Whether the conditions annotated on the certificate of title are resolutory conditions. Whether the action for revocation of the donation and reconveyance of the property has prescribed. Whether it is necessary for the court to fix a period for the fulfillment of the condition under Article 1197 of the Civil Code.
Ruling
The Supreme Court REINSTATED and AFFIRMED the decision of the Regional Trial Court and MODIFIED the decision of the Court of Appeals. The donation is declared revoked, and Central Philippine University is directed to reconvey the property to the heirs of Don Ramon Lopez, Sr. within thirty (30) days from the finality of the judgment.
Ratio Decidendi
On Issue 1: The Court held that the donation was onerous because it imposed a burden (the establishment of a medical college) which is considered the equivalent of the donation itself. Under Article 1181 of the Civil Code, the acquisition of rights depends on the happening of the event which constitutes the condition. In this case, the condition to build a school is a resolutory condition, not a suspensive one. This means the donation became effective upon acceptance, but the donee's rights are extinguished if the condition is not fulfilled. Applying the principle in Parks v. Province of Tarlac, the Court clarified that the school did not need to be built before the donee became the owner, but failure to build it allows for the revocation of the donation. On Issue 2: The Court ruled that prescription does not bar the action. Since the time for fulfilling the condition depended on the exclusive will of the donee (CPU), its absolute acceptance of the donation prevented the statute of limitations from barring the heirs' action. Following the logic in Osmeña v. Rama, the Court noted that the cause of action for revocation arises when that which should have been done is not done. The prescriptive period begins only after the expiration of a reasonable period for the donee to fulfill the charge. Given that CPU had the property for 50 years without taking steps to build the college, the legal possibility of bringing the action remained viable. On Issue 3: The Court held that while Article 1197 generally requires courts to fix a period when an obligation does not specify one, this rule is not applicable here. More than fifty (50) years have passed since the donation, which is more than a reasonable time for CPU to comply with the condition. To remand the case just to fix a period would be a mere technicality and a formality that would serve no purpose other than to delay the case. Under Article 1191 of the Civil Code, when an obligor cannot comply, the obligee may seek rescission. Since there is no just cause to further delay compliance, the Court can decree the revocation immediately without the need for a court-fixed period.
Main Doctrine
An onerous donation is one executed for a valuable consideration, such as when a donation imposes a burden equivalent to the value of the donation. Such donations are governed by the law on contracts. When a person donates land on the condition that the donee build a school thereon, the condition is resolutory; the donation is valid upon acceptance, but failure to comply with the condition results in the loss of the donee's rights. Furthermore, the requirement to fix a period under Article 1197 of the Civil Code is not absolute; if the donee has failed to comply for an unreasonable length of time (e.g., 50 years), the court may decree revocation without first fixing a specific term for compliance.