Topic: Article 1181 of the Civil Code (Obligations and Contracts)

Central Philippine University versus CA

Digester: Marc Pelaez

Facts:

Late Don Ramon Lopez executed a deed of donation in favour of Central Philippine College a
parcel of land with the following annotations from the deed of donation: one, the land shall be
exclusively used for the establishment of a medical college with all its building as part of the
curriculum, two, said land shall not be sold, transferred, or conveyed to any third party, and
three, the same shall be named Ramon Lopez Campus and all the income of the land shall take
part of a fund named Lopez Campus Fund to be utilized for the school’s improvements.

Private respondents, the heirs of deceased filed an action for the annulment of the donation and
reconveyance and damages against CPU that since 1939 up to the time the action was filed, the
latter had been failing to satisfy the conditions of the donation. Petitioner, in contrary, alleged
that the right of the private respondents to file the action had prescribed and that petitioner school
did never use donated parcel of land other than its intended use.

RTC held that petitioner failed to comply with the conditions of the donation declaring such null
and void. The same court directed petitioner to execute a deed of reconveyance of the property in
favour of the private respondents. Appellate court held that while that the donor did not fix a
period within which the first condition of the donation must be fulfilled, hence, until a period
was fixed for the fulfilment of the condition, petitioner could not be considered as having failed
to comply with its part of the bargain. Appellate court reversed RTC decision and ordered the
same to determine the time within which petitioner should comply with the condition annotated
in the title certificate.

Legal issue:

Whether or not the annotations in the certificate of title of petitioner are onerous obligations and
resolutory conditions of the donation which must be fulfilled, otherwise, the donation becomes
revocable.

Decision: RTC decision is affirmed and reinstated and CA decision is modified.

Reason:

A clear perusal of the conditions set forth in the donation deed executed by the deceased gives
the court no alternative but to conclude that his donation was onerous. Said donation was
executed for a valuable consideration which is considered the equivalent of the donation itself.
Under Article 1181 of the CC, on conditional obligations, the acquisition of rights, as well as the
extinguishment or loss of those already acquired, shall depend on the happening of the event
which constitutes the condition. Hence, 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. It is incorrect to say that the
schoolhouse must be constructed first 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 accomplishment of the condition. Absence of
the fulfilment of or compliance with the condition, such was what obtains in the instant case, the
donation may now be revoked and all rights which the donee may have acquired under shall be
deemed lost and extinguished.