G.R. No.

77425

Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 77425 June 19, 1991

THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the
SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners,

vs.

HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA RIETA,
represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents.

G.R. No. 77450 June 19, 1991

THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the
SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners,

vs.

HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA RIETA,
represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents.

Severino C. Dominguez for petitioner Roman Catholic Bishop of Imus, Cavite.

Dolorfino and Dominguez Law Offices for Sps. Ignao.

Joselito R. Enriquez for private respondents.

REGALADO, J.:

These two petitions for review on certiorari1 seek to overturn the decision of the Court of Appeals in CA-
G.R. CV No. 054562 which reversed and set aside the order of the Regional Trial Court of Imus, Cavite
dismissing Civil Case No. 095-84, as well as the order of said respondent court denying petitioner's
motions for the reconsideration of its aforesaid decision.

On November 29, 1984, private respondents as plaintiffs, filed a complaint for nullification of deed of
donation, rescission of contract and reconveyance of real property with damages against petitioners
Florencio and Soledad C. Ignao and the Roman Catholic Bishop of Imus, Cavite, together with the Roman
Catholic Archbishop of Manila, before the Regional Trial Court, Branch XX, Imus, Cavite and which was
docketed as Civil Case No. 095-84 therein.3

In their complaint, private respondents alleged that on August 23, 1930, the spouses Eusebio de Castro
and Martina Rieta, now both deceased, executed a deed of donation in favor of therein defendant
Roman Catholic Archbishop of Manila covering a parcel of land (Lot No. 626, Cadastral Survey of Kawit),
located at Kawit, Cavite, containing an area of 964 square meters, more or less. The deed of donation
allegedly provides that the donee shall not dispose or sell the property within a period of one hundred
(100) years from the execution of the deed of donation, otherwise a violation of such condition would
render ipso facto null and void the deed of donation and the property would revert to the estate of the
donors.

It is further alleged that on or about June 30, 1980, and while still within the prohibitive period to
dispose of the property, petitioner Roman Catholic Bishop of Imus, in whose administration all
properties within the province of Cavite owned by the Archdiocese of Manila was allegedly transferred
on April 26, 1962, executed a deed of absolute sale of the property subject of the donation in favor of
petitioners Florencio and Soledad C. Ignao in consideration of the sum of P114,000. 00. As a
consequence of the sale, Transfer Certificate of Title No. 115990 was issued by the Register of Deeds of
Cavite on November 15, 1980 in the name of said petitioner spouses.

What transpired thereafter is narrated by respondent court in its assailed decision.4

On December 17, 1984, petitioners Florencio Ignao and Soledad C. Ignao filed a motion to dismiss based
on the grounds that (1) herein private respondents, as plaintiffs therein, have no legal capacity to sue;
and (2) the complaint states no cause of action.

On December 19, 1984, petitioner Roman Catholic Bishop of Imus also filed a motion to dismiss on three
(3) grounds, the first two (2) grounds of which were identical to that of the motion to dismiss filed by the
Ignao spouses, and the third ground being that the cause of action has prescribed.

On January 9, 1985, the Roman Catholic Archbishop of Manila likewise filed a motion to dismiss on the
ground that he is not a real party in interest and, therefore, the complaint does not state a cause of
action against him.

After private respondents had filed their oppositions to the said motions to dismiss and the petitioners
had countered with their respective replies, with rejoinders thereto by private respondents, the trial
court issued an order dated January 31, 1985, dismissing the complaint on the ground that the cause of
action has prescribed.5

Private respondents thereafter appealed to the Court of Appeals raising the issues on (a) whether or not
the action for rescission of contracts (deed of donation and deed of sale) has prescribed; and (b)
whether or not the dismissal of the action for rescission of contracts (deed of donation and deed of sale)
on the ground of prescription carries with it the dismissal of the main action for reconveyance of real
property.6

On December 23, 1986, respondent Court of Appeals, holding that the action has not yet prescibed,
rendered a decision in favor of private respondents, with the following dispositive portion:

WHEREFORE, the Order of January 31, 1985 dismissing appellants' complaint is SET ASIDE and Civil Case
No. 095-84 is hereby ordered REINSTATED and REMANDED to the lower court for further proceedings.
No Costs.7

Petitioners Ignao and the Roman Catholic Bishop of Imus then filed their separate motions for
reconsideration which were denied by respondent Court of Appeals in its resolution dated February 6,
1987,8 hence, the filing of these appeals by certiorari.
It is the contention of petitioners that the cause of action of herein private respondents has already
prescribed, invoking Article 764 of the Civil Code which provides that "(t)he donation shall be revoked at
the instance of the donor, when the donee fails to comply with any of the conditions which the former
imposed upon the latter," and that "(t)his action shall prescribe after four years from the non-compliance
with the condition, may be transmitted to the heirs of the donor, and may be exercised against the
donee's heirs.

We do not agree.

Although it is true that under Article 764 of the Civil Code an action for the revocation of a donation
must be brought within four (4) years from the non-compliance of the conditions of the donation, the
same is not applicable in the case at bar. The deed of donation involved herein expressly provides for
automatic reversion of the property donated in case of violation of the condition therein, hence a
judicial declaration revoking the same is not necessary, As aptly stated by the Court of Appeals:

By the very express provision in the deed of donation itself that the violation of the condition thereof
would render ipso facto null and void the deed of donation, WE are of the opinion that there would be
no legal necessity anymore to have the donation judicially declared null and void for the reason that the
very deed of donation itself declares it so. For where (sic) it otherwise and that the donors and the
donee contemplated a court action during the execution of the deed of donation to have the donation
judicially rescinded or declared null and void should the condition be violated, then the phrase reading
"would render ipso facto null and void" would not appear in the deed of donation.9

In support of its aforesaid position, respondent court relied on the rule that a judicial action for
rescission of a contract is not necessary where the contract provides that it may be revoked and
cancelled for violation of any of its terms and conditions.10 It called attention to the holding that there is
nothing in the law that prohibits the parties from entering into an agreement that a violation of the
terms of the contract would cause its cancellation even without court intervention, and that it is not
always necessary for the injured party to resort to court for rescission of the contract.11 It reiterated the
doctrine that a judicial action is proper only when there is absence of a special provision granting the
power of cancellation.12
It is true that the aforesaid rules were applied to the contracts involved therein, but we see no reason
why the same should not apply to the donation in the present case. Article 732 of the Civil Code provides
that donations inter vivos shall be governed by the general provisions on contracts and obligations in all
that is not determined in Title III, Book III on donations. Now, said Title III does not have an explicit
provision on the matter of a donation with a resolutory condition and which is subject to an express
provision that the same shall be considered ipso facto revoked upon the breach of said resolutory
condition imposed in the deed therefor, as is the case of the deed presently in question. The suppletory
application of the foregoing doctrinal rulings to the present controversy is consequently justified.

The validity of such a stipulation in the deed of donation providing for the automatic reversion of the
donated property to the donor upon non-compliance of the condition was upheld in the recent case of
De Luna, et al. vs. Abrigo, et al.13 It was held therein that said stipulation is in the nature of an
agreement granting a party the right to rescind a contract unilaterally in case of breach, without need of
going to court, and that, upon the happening of the resolutory condition or non-compliance with the
conditions of the contract, the donation is automatically revoked without need of a judicial declaration
to that effect. While what was the subject of that case was an onerous donation which, under Article 733
of the Civil Code is governed by the rules on contracts, since the donation in the case at bar is also
subject to the same rules because of its provision on automatic revocation upon the violation of a
resolutory condition, from parity of reasons said pronouncements in De Luna pertinently apply.

The rationale for the foregoing is that in contracts providing for automatic revocation, judicial
intervention is necessary not for purposes of obtaining a judicial declaration rescinding a contract
already deemed rescinded by virtue of an agreement providing for rescission even without judicial
intervention, but in order to determine whether or not the rescission was proper.14

When a deed of donation, as in this case, expressly provides for automatic revocation and reversion of
the property donated, the rules on contract and the general rules on prescription should apply, and not
Article 764 of the Civil Code. Since Article 1306 of said Code authorizes the parties to a contract to
establish such stipulations, clauses, terms and conditions not contrary to law, morals, good customs,
public order or public policy, we are of the opinion that, at the very least, that stipulation of the parties
providing for automatic revocation of the deed of donation, without prior judicial action for that
purpose, is valid subject to the determination of the propriety of the rescission sought. Where such
propriety is sustained, the decision of the court will be merely declaratory of the revocation, but it is not
in itself the revocatory act.
On the foregoing ratiocinations, the Court of Appeals committed no error in holding that the cause of
action of herein private respondents has not yet prescribed since an action to enforce a written contract
prescribes in ten (10) years.15 It is our view that Article 764 was intended to provide a judicial remedy in
case of non-fulfillment or contravention of conditions specified in the deed of donation if and when the
parties have not agreed on the automatic revocation of such donation upon the occurrence of the
contingency contemplated therein. That is not the situation in the case at bar.

Nonetheless, we find that although the action filed by private respondents may not be dismissed by
reason of prescription, the same should be dismissed on the ground that private respondents have no
cause of action against petitioners.

The cause of action of private respondents is based on the alleged breach by petitioners of the
resolutory condition in the deed of donation that the property donated should not be sold within a
period of one hundred (100) years from the date of execution of the deed of donation. Said condition, in
our opinion, constitutes an undue restriction on the rights arising from ownership of petitioners and is,
therefore, contrary to public policy.

Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property
from the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of
the property donated. Although the donor may impose certain conditions in the deed of donation, the
same must not be contrary to law, morals, good customs, public order and public policy. The condition
imposed in the deed of donation in the case before us constitutes a patently unreasonable and undue
restriction on the right of the donee to dispose of the property donated, which right is an indispensable
attribute of ownership. Such a prohibition against alienation, in order to be valid, must not be perpetual
or for an unreasonable period of time.

Certain provisions of the Civil Code illustrative of the aforesaid policy may be considered applicable by
analogy.1âwphi1 Under the third paragraph of Article 494, a donor or testator may prohibit partition for
a period which shall not exceed twenty (20) years. Article 870, on its part, declares that the dispositions
of the testator declaring all or part of the estate inalienable for more than twenty (20) years are void.

It is significant that the provisions therein regarding a testator also necessarily involve, in the main, the
devolution of property by gratuitous title hence, as is generally the case of donations, being an act of
liberality, the imposition of an unreasonable period of prohibition to alienate the property should be
deemed anathema to the basic and actual intent of either the donor or testator. For that reason, the
regulatory arm of the law is or must be interposed to prevent an unreasonable departure from the
normative policy expressed in the aforesaid Articles 494 and 870 of the Code.

In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the
property for an entire century, being an unreasonable emasculation and denial of an integral attribute of
ownership, should be declared as an illegal or impossible condition within the contemplation of Article
727 of the Civil Code. Consequently, as specifically stated in said statutory provision, such condition shall
be considered as not imposed. No reliance may accordingly be placed on said prohibitory paragraph in
the deed of donation. The net result is that, absent said proscription, the deed of sale supposedly
constitutive of the cause of action for the nullification of the deed of donation is not in truth violative of
the latter hence, for lack of cause of action, the case for private respondents must fail.

It may be argued that the validity of such prohibitory provision in the deed of donation was not
specifically put in issue in the pleadings of the parties. That may be true, but such oversight or inaction
does not prevent this Court from passing upon and resolving the same.

It will readily be noted that the provision in the deed of donation against alienation of the land for one
hundred (100) years was the very basis for the action to nullify the deed of d donation. At the same time,
it was likewise the controverted fundament of the motion to dismiss the case a quo, which motion was
sustained by the trial court and set aside by respondent court, both on the issue of prescription. That
ruling of respondent court interpreting said provision was assigned as an error in the present petition.
While the issue of the validity of the same provision was not squarely raised, it is ineluctably related to
petitioner's aforesaid assignment of error since both issues are grounded on and refer to the very same
provision.

This Court is clothed with ample authority to review matters, even if they are not assigned as errors on
appeal, if it finds that their consideration is necessary in arriving at a just decision of the case:16 Thus,
we have held that an unassigned error closely related to an error properly assigned,17 or upon which the
determination of the question properly assigned is dependent, will be considered by the appellate court
notwithstanding the failure to assign it as error.18

Additionally, we have laid down the rule that the remand of the case to the lower court for further
reception of evidence is not necessary where the Court is in a position to resolve the dispute based on
the records before it. On many occasions, the Court, in the public interest and for the expeditious
administration of justice, has resolved actions on the merits instead of remanding them to the trial court
for further proceedings, such as where the ends of justice, would not be subserved by the remand of the
case.19 The aforestated considerations obtain in and apply to the present case with respect to the
matter of the validity of the resolutory condition in question.

WHEREFORE, the judgment of respondent court is SET ASIDE and another judgment is hereby rendered
DISMISSING Civil Case No. 095-84 of the Regional Trial Court, Branch XX, Imus, Cavite.

SO ORDERED.

G.R. NO. 133705. March 31, 2005]

C-J YULO & SONS, INC., Petitioners, v. ROMAN CATHOLIC BISHOP OF SAN PABLO, INC., Respondents.

DECISION

GARCIA, J.:

Appealed to this Court by way of a Petition for Review on Certiorari are the Decision1 dated December
19, 1997 and Resolution2 dated April 30, 1998 of the Court of Appeals in CA-G.R. CV No. 45392,
reversing an earlier decision of the Regional Trial Court at Calamba, Laguna, Branch 34, which ruled in
favor of the herein petitioner C-J Yulo & Sons, Inc., in a suit for revocation of donation with reconveyance
of title, thereat commenced by the petitioner against the herein respondent, Roman Catholic Bishop of
San Pablo, Inc.

The facts are not at all disputed:

On September 24, 1977, petitioner donated unto respondent a parcel of land at Canlubang, Calamba,
Laguna with an area of 41,117 square meters and registered in its name under Transfer Certificate of
Title (TCT) No. T-82803. The deed of donation which also bears the acceptance of the donee recites the
considerations therefor and the conditions thereto attached, to wit:
WHEREAS, Donee is a religious corporation engaged in much (sic) humanitarian Christian work in Laguna
and elsewhere, educating and forming the young, caring for the infirm and the aged in the fulfillment of
its mission;

WHEREAS, Donor recognizes the need for a privately endowed institution that will care for the homeless
and destitute old people in the community, as well as the other senior citizens who for some reason or
other find themselves without family with whom to live the last years of their life:

WHEREFORE, Donor is willing, in order to help establish and support such an institution to donate the
land necessary for its housing, as well as an area of land whereon it may raise crops for its support and
for the sustenance of its residents;

WHEREAS, Donee is willing and able, with the wanted help of Donor and of other benefactors, to
establish, operate and maintain such a home for the aged.

NOW, THEREFORE, in consideration of all the foregoing premises, Donor hereby transfers and conveys to
Donee by way of donation all its rights, title and interest in that certain parcel of land covered by TCT No.
T-82803 of the Land Records of Laguna, the technical descriptions of which are recited above, subject to
the following conditions and covenants, each of which is a material consideration for this Deed:

1. So much of the land as may be necessary shall be used for the construction of a home for the aged
and infirm, regardless of religion or creed, but preferably those coming from Canlubang, Calamba,
Laguna; provided that retired and/or aged priests may be admitted to the home; and provided further
that any senior citizen from the area who has retired from business or work may likewise be admitted to
the home, subject to the payment to the institution of such sum as he may afford for his support.

2. A Green Belt that is 15 meters wide shall be established and maintained by the Donor along the length
of the land to separate and insulate it from the projected highway.

3. Such part of land as may not be needed for the residence and the Green Belt shall be devoted by
Donee with the help of such residents of the home as are able, to the raising of agricultural crops for the
consumption of the residents of the home, and of such other crops that may be sold to defray the cost of
running the home and feeding its residents; provided, that should the area later become so fully
urbanized as to make this limitation on use economically, impractical, any portion of the land may, with
the written consent of the Donor, be put to commercial use by the Donee by leasing the same for
wholesome and socially-acceptable activities; provided further that the rentals from such commercial
leases shall be used, first, to meet the expenses of the home; second, to enlarge its population and
expand its facilities; and finally for other charitable purposes in Laguna, in that order.

4. Donee acknowledges that Donor's generous act will greatly aid Donee in accomplishing its mission on
earth, and, recognizing the generosity of the Yulo family as the reason for such act, Donee undertakes to
cause every year the celebration of masses for the intention of the various members of the family of Mr.
Jose Yulo, Sr., on festive and solemn occasions in the said family.

5. Except with prior written consent of the Donor or its successor, the Donee shall not use the land
except for the purpose as provided above in paragraph 1 hereof, nor sell or dispose the land for any
reason whatsoever, nor convey any portion of the same except in lease for commercial use as provided
above in paragraph 3 hereof, otherwise the said land with all real improvements thereon shall revert in
trust to the Donor for prompt disposition in favor of some other charitable organization that Donor may
deem best suited to the care of the aged. (Underscoring supplied).

On the basis of the same deed, TCT No. T-82803 of the donor was cancelled and replaced by TCT No. T-
91348 in the name of donee Roman Catholic Bishop of San Pablo, Inc.

Thereafter, or sometime in 1980, the donee, for purposes of generating funds to build the perimeter
fence on the donated property and the construction of a nucleus building for the aged and the infirm,
leased a portion of the donated property to one Martin Gomez who planted said portion with sugar
cane. There is no dispute that the lease agreement was entered into by the donee without the prior
written consent of the donor, as required in the deed of donation. The lease to Gomez ended in 1985.

The following year, 1986, a portion of the donated property was again leased by the donee, this time to
one Jose Bostre who used the leased area as a ranch. As explained by the donee, it entered into a lease
agreement with Bostre to protect the premises from vandals and for the electrification of the nucleus
building of the home for the aged and in the infirm, which was named as "Casa dela Merced." As before,
however, the donee executed the lease contract without the prior written consent of the donor.
After the termination of the Bostre lease agreement, the donee, for the third time, leased a portion of
the donated property to one Rudy Caballes who used the leased area for fattening cattles. The donee
explained that the lease agreement with Bostre was also for the purposes of generating funds for the
completion of "Casa dela Merced." Again, however, the donee did not secure the prior written consent
of the donor.

Hence, on September 20, 1990, pursuant to a board resolution, the donor, through its president Miguel
A. Yulo, addressed a letter to the donee informing the latter that it was revoking the donation in
accordance with Section 5 of the deed due to the donee's non-compliance with and material breach of
the conditions thereunder stipulated. In the same letter, the donor requested for the turn-over of the
donee's TCT No. T-91348 over the donated property.

In a reply-letter dated November 5, 1990, the donee, through Bishop Pedro N. Bantigue, D.D., denied any
material breach of the conditions of the deed of donation and manifested its continued and faithful
compliance with the provisions thereof. In the same letter, the donee refused the turn-over of its title to
the donor.

It was against the foregoing backdrop of events when, on November 19, 1990, in the Regional Trial Court
at Calamba, Laguna the donor, alleging non-compliance with and violation by the donee of the
conditions of the deed of donation, filed its complaint in this case against donee Roman Catholic
Archbishop of San Pablo, Inc., therein reciting the imputed non-compliance and violations by the donee
of the terms and conditions of the deed of donation, as follows:

a) non-construction of the home for the aged and infirmed in the lot despite the lapse of a reasonable
and considerable length of time;

b) present land use of the area is a cattle farm, the owner of which has a lease contract with the donee;
andcralawlibrary

c) no prior written consent of the donor has been obtained for the present and actual use of the
property donated,
and accordingly prayed that the subject deed of donation be adjudged revoked and void and the donee
ordered to return and/or reconvey the property donated.

In its answer, defendant donee alleged that it was doing its best to comply with the provisions of the
deed of donation relative to the establishment of the home for the aged and the infirm, adding that the
leases of portions of the land were with the express, albeit unwritten consent, of Jesus Miguel Yulo
himself. In the same answer, defendant donee interposed the defense that the donor's cause of action
for revocation, if any, had already prescribed because the leases were known to the latter since 1980.

In a decision dated December 22, 1995, the trial court rendered judgment for donor-plaintiff C-J Yulo &
Sons, Inc., thus:

WHEREFORE, judgment is hereby rendered for plaintiff and against the defendant, declaring the Deed of
Donation dated September 24, 1977 (Exh. "C") REVOKED, affirming plaintiff's revocation of the same in
the letter dated September 20, 1990 (Exh. "D").

Defendant and all persons claiming rights under them are hereby ordered to immediately vacate the
premises of the donated property and to hand over to plaintiff the peaceful possession of the aforesaid
premises.

To avoid multiplicity of suits, the Register of Deeds of Calamba, Laguna, is hereby ordered to require the
defendant to surrender Transfer Certificate of Title No. T-91348 (Exh. "B") and thereafter cancel the same
and issue, upon payment of the required fees, a new Transfer Certificate of Title in favor of plaintiffs,
with cost against the defendant.

SO ORDERED.

Therefrom, donee-defendant Roman Catholic Bishop of San Pablo, Inc., went to the Court of Appeals in
CA-G.R. CV No. 45392.
In the herein assailed Decision dated December 19, 1997,3 the Court of Appeals reversed that of the trial
court and upheld the donation in question, to wit:

WHEREFORE, the decision of the trial court dated December 22, 1993 is hereby REVERSED and the
donation dated September 24, 1977 (Exhibit C) which conveyed title to the donated property in the
appellee's name is hereby UPHELD.

SO ORDERED.

Its motion for reconsideration having been denied by the same court in its Resolution of April 30, 1998,4
donor C-J Yulo & Sons, Inc., has come to this Court via the present recourse on its sole submission that -

THE RULING OF THE COURT OF APPEALS (THAT THE REVOCATION OF THE DONATION BY PETITIONER
WAS IMPROPER) IS CONTRARY TO LAW AND APPLICABLE JURISPRUDENCE.

We DENY.

The Court of Appeals sustained the trial court's finding that the donation is an onerous one since the
donee was burdened with the establishment on the donated property of a home for the aged and the
infirm. It likewise agreed with the trial court that there were violations of the terms and conditions of
the deed of donation when the donee thrice leased a portion of the property without the prior written
consent of the donor. Likewise upheld by the appellate court is the ruling of the trial court that the
prescriptive period of the donor's right to revoke the donation is ten (10) years based on Article 1144 of
the Civil Code, instead of four (4) years per Article 764 of the same Code, and therefore the action for
revocation filed by the petitioner is not barred by prescription.

Even then, the Court of Appeals reversed the trial court's decision, the reversal being premised on the
appellate court's finding that the breaches thrice committed by the respondent were merely casual
breaches which nevertheless did not detract from the purpose of which the donation was made: the
establishment of a home for the aged and the infirm.
We agree.

Petitioner contends that the case at bar is similar to the 1995 case of Central Philippine University v.
Court of Appeals,5 where the donee failed for more than 50 years to establish, as required, a medical
school on the land donated, and where this Court declared the donation to have been validly revoked.

To the mind of the Court, what is applicable to this case is the more recent [2001] case of Republic v.
Silim,6 where respondent Silim donated a 5,600-square meter parcel of land in favor of the Bureau of
Public Schools, Municipality of Malangas, Zamboanga del Sur with the condition that the said property
should be used exclusively and forever for school purposes only. Although a school building was
constructed on the property through the efforts of the Parent-Teachers Association of Barangay
Kauswagan, the funds for a Bagong Lipunan school building could not be released because the
government required that it be built on a one-hectare parcel of land. This led the donee therein to
exchange the donated property for a bigger one.

In Silim, the Court distinguished the four (4) types of donations:

Donations, according to its purpose or cause, may be categorized as: (1) pure or simple; (2)
remuneratory or compensatory; (3) conditional or modal; and (4) onerous. A pure or simple donation is
one where the underlying cause is plain gratuity. This is donation in its truest form. On the other hand, a
remuneratory or compensatory donation is one made for the purpose of rewarding the donee for past
services, which services do not amount to a demandable debt. A conditional or modal donation is one
where the donation is made in consideration of future services or where the donor imposes certain
conditions, limitations or charges upon the donee, the value of which is inferior than that of the
donation given. Finally, an onerous donation is that which imposes upon the donee a reciprocal
obligation or, to be more precise, this is the kind of donation made for a valuable consideration, the cost
of which is equal to or more than the thing donated.

Of all the foregoing classifications, donations of the onerous type are the most distinct. This is because,
unlike the other forms of donation, the validity of and the rights and obligations of the parties involved
in an onerous donation is completely governed not by the law on donations but by the law on contracts.
In this regard, Article 733 of the New Civil Code provides:
ARTICLE 733 Donations with onerous cause shall be governed by the rules on contracts, and
remuneratory donations by the provisions of the present Title as regards that portion which exceeds the
value of the burden imposed.

The donation involved in the present controversy is one which is onerous since there is a burden
imposed upon the donee to build a school on the donated property.

Here, the Court of Appeals correctly applied the law on contracts instead of the law on donations
because the donation involved in this case is onerous, saddled as it is by a burden imposed upon the
donee to put up and operate a home for the aged and the infirm. We thus quote with approval the terse
ruling of the appellate court in the challenged decision:

First, the violations of the conditions of the donation committed by the donee were merely casual
breaches of the conditions of the donation and did not detract from the purpose by which the donation
was made, i.e., for the establishment of a home for the aged and the infirm. In order for a contract which
imposes a reciprocal obligation, which is the onerous donation in this case wherein the donor is
obligated to donate a 41,117 square meter property in Canlubang, Calamba, Laguna on which property
the donee is obligated to establish a home for the aged and the infirm (Exhibit C), may be rescinded per
Article 1191 of the New Civil Code, the breach of the conditions thereof must be substantial as to defeat
the purpose for which the contract was perfected (Tolentino, "Civil Code of the Philippines," Vol. IV, pp.
179-180; Universal Food Corp. v. Court of Appeals, 33 SCRA 1, 18; Ocampo v. Court of Appeals, 233 SCRA
551, 562). Thus, in the case of "Ocampo v. C.A." (ibid), citing the case of "Angeles v. Calasanz" (135 SCRA
323, 330), the Supreme Court ruled:

The right to rescind the contract for non-performance of one of its stipulations x x x is not absolute. In
Universal Food Corp. v. Court of Appeals (33 SCRA 1) the Court stated that:

The general rule is that rescission of a contract will not be permitted for a slight or casual breach, but
only for such substantial and fundamental breach as would defeat the very object of the parties in
making the agreement (Song Fo & Co. v. Hawaiian-Philippine Co., 47 Phil. 821,827). The question of
whether a breach of a contract is substantial depends upon the attendant circumstances (Corpus v. Hon.
Alikpala, et al., L-23707 & L-23720, Jan. 17, 1968).
The above ruling of the Court of Appeals is completely in tune with this Court's disposition in Republic v.
Silim, supra. The donor therein sought to revoke the donation on the ground that the donee breached
the condition to exclusively and forever use the land for school purpose only, but this Court ruled in favor
of the donee:

Without the slightest doubt, the condition for the donation was not in any way violated when the lot
donated was exchanged with another one. The purpose for the donation remains the same, which is for
the establishment of a school. The exclusivity of the purpose was not altered or affected. In fact, the
exchange of the lot for a much bigger one was in furtherance and enhancement of the purpose of the
donation. The acquisition of the bigger lot paved way for the release of funds for the construction of
Bagong Lipunan school building which could not be accommodated by the limited area of the donated
lot.

As in Silim, the three (3) lease contracts herein entered into by the donee were for the sole purpose of
pursuing the objective for which the donation was intended. In fact, such lease was authorized by the
donor by express provision in the deed of donation, albeit the prior written consent therefor of the
donor is needed. Hence, considering that the donee's acts did not detract from the very purpose for
which the donation was made but precisely to achieve such purpose, a lack of prior written consent of
the donor would only constitute casual breach of the deed, which will not warrant the revocation of the
donation.

Besides, this Court cannot consider the requirement of a prior written consent by the donor for all
contracts of lease to be entered into by the donee as an absolute ground for revocation of the donation
because such a condition, if not correlated with the purpose of the donation, would constitute undue
restriction of the donee's right of ownership over the donated property.

Instructive on this point is the ruling of this Court in The Roman Catholic Archbishop of Manila v. Court of
Appeals,7 viz:

Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property
from the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of
the property donated. Although the donor may impose certain conditions in the deed of donation, the
same must not be contrary to law, morals, good customs, public order and public policy.
xxx

In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the
property for an entire century, being an unreasonable emasculation and denial of an integral attribute of
ownership, should be declared as an illegal or impossible condition within the contemplation of Article
727 of the Civil Code. Consequently, as specifically stated in said statutory provision, such condition shall
be considered as not imposed. No reliance may accordingly be placed on said prohibitory paragraph in
the deed of donation. The net result is that, absent said proscription, the deed of sale supposedly
constitutive of the cause of action for the nullification of the deed of donation is not in truth violative of
the latter, hence, for lack of cause of action, the case for private respondents must fail.

If petitioner would insist that the lack of prior written consent is a resolutory condition that is absolute in
character, the insistence would not stand the validity test under the foregoing doctrine. What would
have been casual breaches of the terms and conditions of the donation, may, in that event, even be
considered as no breach at all when the Court strikes down such absolute condition of prior written
consent by the donor in all instances without any exception whatsoever. The Court, however,
understands that such a condition was written with a specific purpose in mind, which is, to ensure that
the primary objective for which the donation was intended is achieved. A reasonable construction of
such condition rather than totally striking it would, therefore, be more in accord with the spirit of the
donation. Thus, for as long as the contracts of lease do not detract from the purpose for which the
donation was made, the complained acts of the donee will not be deemed as substantial breaches of the
terms and conditions of the deed of donation to merit a valid revocation thereof by the donor.

Finally, anent petitioner's contention that the Court of Appeals failed to consider that respondent had
abandoned the idea of constructing a home for the aged and infirm, the explanation in respondent's
comment is enlightening. Petitioner relies on Bishop Bantigue's letter8 dated June 21, 1990 as its basis
for claiming that the donee had altogether abandoned the idea of constructing a home for the aged and
the infirm on the property donated. Respondent, however, explains that the Bishop, in his letter, written
in the vernacular, expressed his concern that the surrounding area was being considered to be re-
classified into an industrial zone where factories are expected to be put up. There is no question that this
will definitely be disadvantageous to the health of the aged and the infirm. Thus, the Bishop asked
permission from the donor for a possible exchange or sale of the donated property to ultimately pursue
the purpose for which the donation was intended in another location that is more appropriate.
The Court sees the wisdom, prudence and good judgment of the Bishop on this point, to which it
conforms completely. We cannot accede to petitioner's view, which attributed the exact opposite
meaning to the Bishop's letter seeking permission to sell or exchange the donated property.

In Silim, supra, this Court ruled that such exchange does not constitute breach of the terms and
conditions of the donation. We see no reason for the Court to think otherwise in this case. To insist that
the home for the aged and infirm be constructed on the donated property, if the industrialization indeed
pushes through, defies rhyme and reason. Any act by the donor to prevent the donee from ultimately
achieving the purpose for which the donation was intended would constitute bad faith, which the Court
will not tolerate.

WHEREFORE, the instant petition is DENIED and the assailed decision of the Court of Appeals AFFIRMED
in toto.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 140487

FIRST DIVISION

G.R. No. 140487 April 2, 2001

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.

LEON SILIM and ILDEFONSA MANGUBAT, respondents.

KAPUNAN, J.:

Before the Court is a petition for review under Rule 45 seeking the reversal of the Decision of the Court
of Appeals in CA-G.R. No. 43840, entitled Leon Silim, et al. vs. Wilfredo Palma, et al., which declared null
and void the donation made by respondents of a parcel of land in favor of the Bureau of Public Schools,
Municipality of Malangas, Zamboanga del Sur.

The antecedents of this case are as follows:

On 17 December 1971, respondents, the Spouses Leon Silim and Ildefonsa Mangubat, donated a 5,600
square meter parcel of land in favor of the Bureau of Public Schools, Municipality of Malangas,
Zamboanga del Sur (BPS). In the Deed of Donation, respondents imposed the condition that the said
property should "be used exclusively and forever for school purposes only."1 This donation was accepted
by Gregorio Buendia, the District Supervisor of BPS, through an Affidavit of Acceptance and/or
Confirmation of Donation.

Through a fund raising campaign spearheaded by the Parent-Teachers Association of Barangay

Kauswagan, a school building was constructed on the donated land. However, the Bagong Lipunan school
building that was supposed to be allocated for the donated parcel of land in Barangay Kauswagan could
not be released since the government required that it be built upon a one (1) hectare parcel of land. To
remedy this predicament, Assistant School Division Superintendent of the Province of Zamboanga del
Sur, Sabdani Hadjirol, authorized District Supervisor Buendia to officially transact for the exchange of the
one-half (1/2) hectare old school site of Kauswagan Elementary School to a new and suitable location
which would fit the specifications of the government. Pursuant to this, District Supervisor Buendia and
Teresita Palma entered into a Deed of Exchange whereby the donated lot was exchanged with the bigger
lot owned by the latter. Consequently, the Bagong Lipunan school buildings were constructed on the new
school site and the school building previously erected on the donated lot was dismantled and
transferred to the new location.

When respondent Leon Silim saw, to his surprise, that Vice-Mayor Wilfredo Palma was constructing a
house on the donated land, he asked the latter why he was building a house on the property he donated
to BPS. Vice Mayor Wilfredo Palma replied that he is already the owner of the said property. Respondent
Leon Silim endeavored to stop the construction of the house on the donated property but Vice-Mayor
Wilfredo Palma advised him to just file a case in court.
On February 10, 1982, respondents filed a Complaint for Revocation and Cancellation of Conditional
Donation, Annulment of Deed of Exchange and Recovery of Possession and Ownership of Real Property
with damages against Vice Mayor Wilfredo Palma, Teresita Palma, District Supervisor Buendia and the
BPS before the Regional Trial Court of Pagadian City, Branch 21. In its Decision dated 20 August 1993, the
trial court dismissed the complaint for lack of merit.2 The pertinent portion of the decision reads:

Thus, it is the considered view of this Court that there was no breach or violation of the condition
imposed in the subject Deed of Donation by the donee. The exchange is proper since it is still for the
exclusive use for school purposes and for the expansion and improvement of the school facilities within
the community. The Deed of Exchange is but a continuity of the desired purpose of the donation made
by plaintiff Leon Silim.

In sum, it may be safely stated that the aforesaid transaction of exchange is a (sic) exception to the law
invoked by the plaintiffs (Art. 764, Civil Code). The donee, being the State had the greater reciprocity of
interest in the gratuitous and onerous contract of donation. It would be illogical and selfish for the donor
to technically preclude the donee from expanding its school site and improvement of its school facilities,
a paramount objective of the donee in promoting the general welfare and interests of the people of
Barangay Kauswagan. But it is a well-settled rule that if the contract is onerous, such as the Deed of
Donation in question, the doubt shall be settled in favor of the greatest reciprocity of interests, which in
the instant case, is the donee.

x x x

WHEREFORE, in view of all the foregoing, judgement is hereby rendered:

1. Dismissing the complaint for lack of merit;

2. Dismissing the counterclaim for the sake of harmony and reconciliation between the parties;

3. With costs against plaintiffs.

SO ORDERED.3

Not satisfied with the decision of the trial court, respondents elevated the case to the Court of Appeals.
In its Decision dated 22 October 1999, the Court of Appeals reversed the decision of the trial court and
declared the donation null and void on the grounds that the donation was not properly accepted and the
condition imposed on the donation was violated.4

Hence, the present case where petitioner raises the following issues:

I. WHETHER THE COURT OF APPEALS ERRED IN DECLARING THE DONATION NULL AND VOID DUE TO AN
INVALID ACCEPTANCE BY THE DONEE.

II. WHETHER THE COURT OF APPEALS ERRED IN DECLARING THE DONATION NULL AND VOID DUE TO AN
ALLEGED VIOLATION OF A CONDITION IN THE DONATION.5

The Court gives DUE COURSE to the petition.

Petitioner contends that the Court of Appeals erred in declaring the donation null and void for the
reason that the acceptance was not allegedly done in accordance with Articles 7456 and 7497 of the
New Civil Code.

We agree.

Donations, according to its purpose or cause, may be categorized as: (1) pure or simple; (2)
remuneratory or compensatory; (3) conditional or modal; and (4) onerous. A pure or simple donation is
one where the underlying cause is plain gratuity.8 This is donation in its truest form. On the other hand,
a remuneratory or compensatory donation is one made for the purpose of rewarding the donee for past
services, which services do not amount to a demandable debt.9 A conditional or modal donation is one
where the donation is made in consideration of future services or where the donor imposes certain
conditions, limitations or charges upon the donee, the value of which is inferior than that of the
donation given.10 Finally, an onerous donation is that which imposes upon the donee a reciprocal
obligation or, to be more precise, this is the kind of donation made for a valuable consideration, the cost
of which is equal to or more than the thing donated.11

Of all the foregoing classifications, donations of the onerous type are the most distinct. This is because,
unlike the other forms of donation, the validity of and the rights and obligations of the parties involved
in an onerous donation is completely governed not by the law on donations but by the law on contracts.
In this regard, Article 733 of the New Civil Code provides:

Art. 733. Donations with an onerous cause shall be governed by the rules on contracts, and
remuneratory donations by the provisions of the present Title as regards that portion which exceeds the
value of the burden imposed.

The donation involved in the present controversy is one which is onerous since there is a burden
imposed upon the donee to build a school on the donated property.12

The Court of Appeals held that there was no valid acceptance of the donation because:

x x x

Under the law the donation is void if there is no acceptance. The acceptance may either be in the same
document as the deed of donation or in a separate public instrument. If the acceptance is in a separate
instrument, "the donor shall be notified thereof in an authentic form, and his step shall be noted in both
instruments.

"Title to immovable property does not pass from the donor to the donee by virtue of a deed of donation
until and unless it has been accepted in a public instrument and the donor duly noticed thereof.
(Abellera vs. Balanag, 37 Phils. 85; Alejandro vs. Geraldez, 78 SCRA 245). If the acceptance does not
appear in the same document, it must be made in another. Solemn words are not necessary; it is
sufficient if it shows the intention to accept, But in this case, it is necessary that formal notice thereof be
given to the donor and the fact that due notice has been given it must be noted in both instruments
(that containing the offer to donate and that showing acceptance). Then and only then is the donation
perfected. (11 Manresa 155-11, cited in Vol. II, Civil Code of the Philippines by Tolentino.)."
This Court perused carefully the Deed of Donation marked as exhibit "A" and "1" to determine whether
there was acceptance of the donation. This Court found none. We further examined the record if there is
another document which embodies the acceptance, we found one. Although the Court found that in the
offer of exhibits of the defendants, a supposed affidavit of acceptance and/or confirmation of the
donation, marked as exhibit "8" appears to have been offered.

However, there is nothing in the record that the exhibits offered by the defendants have been admitted
nor such exhibits appear on record.

Assuming that there was such an exhibit, the said supposed acceptance was not noted in the Deed of
Donation as required under Art. 749 of the Civil Code. And according to Manresa, supra, a noted civilist,
the notation is one of the requirements of perfecting a donation. In other words, without such a
notation, the contract is not perfected contract. Since the donation is not perfected, the contract is
therefore not valid.13

x x x

We hold that there was a valid acceptance of the donation.

Sections 745 and 749 of the New Civil Code provide:

ART. 745. The donee must accept the donation personally, or through an authorized person with a
special power for the purpose, or with a general and sufficient power; otherwise the donation shall be
void.

ART. 749. In order that the donation of an immovable may be laid, it must be made in a public
document, specifying therein the property donated and the value of the charge which the donee must
satisfy.
The acceptance may be made in the same deed of donation or in a separate public document, but it shall
not take effect unless it is done during the lifetime of the donor.

If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic
form, and this step shall be noted in both instruments.

Private respondents, as shown above, admit that in the offer of exhibits by the defendants in the trial
court, an affidavit of acceptance and/or confirmation of the donation, marked as Exhibit "8," was offered
in evidence. However, private respondents now question this exhibit because, according to them "there
is nothing in the record that the exhibits offered by the defendants have been admitted nor such exhibit
appear on record."

Respondents' stance does not persuade. The written acceptance of the donation having been considered
by the trial court in arriving at its decision, there is the presumption that this exhibit was properly
offered and admitted by the court.

Moreover, this issue was never raised in the Court of Appeals. Nowhere in their brief did respondents
question the validity of the donation on the basis of the alleged defect in the acceptance thereof. If there
was such a defect, why did it take respondents more than ten (10) years from the date of the donation to
question its validity? In the very least, they are guilty of estoppel.14

Respondents further argue that assuming there was a valid acceptance of the donation, the acceptance
was not noted in the Deed of Donation as required in Article 749 of the Civil Code, hence, the donation is
void.

The purpose of the formal requirement for acceptance of a donation is to ensure that such acceptance is
duly communicated to the donor. Thus, in Pajarillo vs. Intermediate Appellate Court,15 the Court held:

There is no question that the donation was accepted in a separate public instrument and that it was duly
communicated to the donors. Even the petitioners cannot deny this. But what they do contend is that
such acceptance was not "noted in both instruments," meaning the extrajudicial partition itself and the
instrument of acceptance, as required by the Civil Code.
That is perfectly true. There is nothing in either of the two instruments showing that "authentic notice"
of the acceptance was made by Salud to Juana and Felipe. And while the first instrument contains the
statement that "the donee does hereby accept this donation and does hereby express her gratitude for
the kindness and liberality of the donor," the only signatories thereof were Felipe Balane and Juana
Balane de Suterio. That was in fact the reason for the separate instrument of acceptance signed by Salud
a month later.

A strict interpretation of Article 633 can lead to no other conclusion that the annulment of the donation
for being defective in form as urged by the petitioners. This would be in keeping with the unmistakable
language of the above-quoted provision. However, we find that under the circumstances of the present
case, a literal adherence to the requirement of the law might result not in justice to the parties but
conversely a distortion of their intentions. It is also a policy of the Court to avoid such as interpretation.

The purpose of the formal requirement is to insure that the acceptance of the donation is duly
communicated to the donor. In the case at bar, it is not even suggested that Juana was unaware of the
acceptance for she in fact confirmed it later and requested that the donated land be not registered
during her lifetime by Salud. Given this significant evidence, the Court cannot in conscience declare the
donation ineffective because there is no notation in the extrajudicial settlement of the donee's
acceptance. That would be placing too much stress on mere form over substance. It would also disregard
the clear reality of the acceptance of the donation as manifested in the separate instrument dated June
20, 1946, and as later acknowledged by Juan.

In the case at bar, a school building was immediately constructed after the donation was executed.
Respondents had knowledge of the existence of the school building put up on the donated lot through
the efforts of the Parents-Teachers Association of Barangay Kauswagan. It was when the school building
was being dismantled and transferred to the new site and when Vice-Mayor Wilfredo Palma was
constructing a house on the donated property that respondents came to know of the Deed of Exchange.
The actual knowledge by respondents of the construction and existence of the school building fulfilled
the legal requirement that the acceptance of the donation by the donee be communicated to the donor.

On respondents' claim, which was upheld by the Court of Appeals, that the acceptance by BPS District
Supervisor Gregorio Buendia of the donation was ineffective because of the absence of a special power
of attorney from the Republic of the Philippines, it is undisputed that the donation was made in favor of
the Bureau of Public Schools. Such being the case, his acceptance was authorized under Section 47 of
the 1987 Administrative Code which states:
SEC. 47. Contracts and Conveyances. - Contracts or conveyances may be executed for and in behalf of the
Government or of any of its branches, subdivisions, agencies, or instrumentalities, whenever demanded
by the exigency or exigencies of the service and as long as the same are not prohibited by law.

Finally, it is respondents' submission that the donee, in exchanging the donated lot with a bigger lot,
violated the condition in the donation that the lot be exclusively used for school purposes only.

What does the phrase "exclusively used for school purposes" convey? "School" is simply an institution or
place of education.16 "Purpose" is defined as "that which one sets before him to accomplish or attain;
an end, intention, or aim, object, plan, project. Term is synonymous with the ends sought, an object to
be attained, an intention, etc."17 "Exclusive" means "excluding or having power to exclude (as by
preventing entrance or debarring from possession, participation, or use); limiting or limited to
possession, control or use.18

Without the slightest doubt, the condition for the donation was not in any way violated when the lot
donated was exchanged with another one. The purpose for the donation remains the same, which is for
the establishment of a school. The exclusivity of the purpose was not altered or affected. In fact, the
exchange of the lot for a much bigger one was in furtherance and enhancement of the purpose of the
donation. The acquisition of the bigger lot paved the way for the release of funds for the construction of
Bagong Lipunan school building which could not be accommodated by the limited area of the donated
lot.

WHEREFORE, the decision of the Court of Appeals is hereby REVERSED and SET ASIDE and the decision
of the Regional Trial Court is REINSTATED.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Pardo, and Ynares-Santiago, JJ., concur.

Puno J., on official leave.

G.R. No. L-27952

Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. L-27952 February 15, 1982

TESTATE ESTATE OF JOSE EUGENIO RAMIREZ, MARIA LUISA PALACIOS, Administratrix, petitioner-appellee,

vs.

MARCELLE D. VDA. DE RAMIREZ, ET AL., oppositors, JORGE and ROBERTO RAMIREZ, legatees, oppositors-
appellants.

ABAD SANTOS, J.:

The main issue in this appeal is the manner of partitioning the testate estate of Jose Eugenio Ramirez
among the principal beneficiaries, namely: his widow Marcelle Demoron de Ramirez; his two
grandnephews Roberto and Jorge Ramirez; and his companion Wanda de Wrobleski.

The task is not trouble-free because the widow Marcelle is a French who lives in Paris, while the
companion Wanda is an Austrian who lives in Spain. Moreover, the testator provided for substitutions.

Jose Eugenio Ramirez, a Filipino national, died in Spain on December 11, 1964, with only his widow as
compulsory heir. His will was admitted to probate by the Court of First Instance of Manila, Branch X, on
July 27, 1965. Maria Luisa Palacios was appointed administratrix of the estate. In due time she submitted
an inventory of the estate as follows:
INVENTARIO

Una sexta parte (1/6) proindiviso de un te

rreno, con sus mejoras y edificaciones, situadoen

la Escolta, Manila............................................................. P500,000.00

Una sexta parte (1/6) proindiviso de dos

parcelas de terreno situadas en Antipolo, Rizal................... 658.34

Cuatrocientos noventa y uno (491) acciones

de la 'Central Azucarera de la Carlota a P17.00

por accion ................................................................................8,347.00

Diez mil ochocientos seize (10,806) acciones

de la 'Central Luzon Milling Co.', disuelta y en

liquidacion a P0.15 por accion ..............................................1,620.90

Cuenta de Ahorros en el Philippine Trust

Co.............................................................................................. 2,350.73

TOTAL.............................................................. P512,976.97

MENOS:

Deuda al Banco de las Islas Filipinas, garan-

tizada con prenda de las acciones de La Carlota ......... P 5,000,00

VALOR LIQUIDO........................................... P507,976.97

The testamentary dispositions are as follows:

A.—En nuda propiedad, a D. Roberto y D. Jorge Ramirez, ambas menores de edad, residentes en Manila,
I.F., calle 'Alright, No. 1818, Malate, hijos de su sobrino D. Jose Ma. Ramirez, con sustitucion vulgar a
favor de sus respectivos descendientes, y, en su defecto, con sustitucion vulgar reciprocal entre ambos.

El precedente legado en nuda propiedad de la participacion indivisa de la finca Santa Cruz Building, lo
ordena el testador a favor de los legatarios nombrados, en atencion a que dicha propiedad fue creacion
del querido padre del otorgante y por ser aquellos continuadores del apellido Ramirez,

B.—Y en usufructo a saber: —

a. En cuanto a una tercera parte, a favor de la esposa del testador, Da. Marcelle Ramirez, domiciliada en
IE PECO, calle del General Gallieni No. 33, Seine Francia, con sustitucion vulgar u fideicomisaria a favor de
Da. Wanda de Wrobleski, de Palma de Mallorca, Son Rapina Avenida de los Reyes 13,
b.—Y en cuanto a las dos terceras partes restantes, a favor de la nombrada Da. Wanda de Nrobleski con
sustitucion vulgar v fideicomisaria a saber:—

En cuanto a la mitad de dichas dos terceras partes, a favor de D. Juan Pablo Jankowski, de Son Rapina
Palma de Mallorca; y encuanto a la mitad restante, a favor de su sobrino, D. Horace V. Ramirez, San Luis
Building, Florida St. Ermita, Manila, I.F.

A pesar de las sustituciones fideiconiisarias precedentemente ordinadas, las usufiructuarias nombradas

conjuntamente con los nudo propietarios, podran en cualquier memento vender a tercero los bienes
objeto delegado, sin intervencion alguna de los titulares fideicomisaarios.

On June 23, 1966, the administratrix submitted a project of partition as follows: the property of the
deceased is to be divided into two parts. One part shall go to the widow 'en pleno dominio" in
satisfaction of her legitime; the other part or "free portion" shall go to Jorge and Roberto Ramirez "en
nuda propriedad." Furthermore, one third (1/3) of the free portion is charged with the widow's usufruct
and the remaining two-thirds (2/3) with a usufruct in favor of Wanda.

Jorge and Roberto opposed the project of partition on the grounds: (a) that the provisions for vulgar
substitution in favor of Wanda de Wrobleski with respect to the widow's usufruct and in favor of Juan
Pablo Jankowski and Horacio V. Ramirez, with respect to Wanda's usufruct are invalid because the first
heirs Marcelle and Wanda) survived the testator; (b) that the provisions for fideicommissary
substitutions are also invalid because the first heirs are not related to the second heirs or substitutes
within the first degree, as provided in Article 863 of the Civil Code; (c) that the grant of a usufruct over
real property in the Philippines in favor of Wanda Wrobleski, who is an alien, violates Section 5, Article III
of the Philippine Constitution; and that (d) the proposed partition of the testator's interest in the Santa
Cruz (Escolta) Building between the widow Marcelle and the appellants, violates the testator's express
win to give this property to them Nonetheless, the lower court approved the project of partition in its
order dated May 3, 1967. It is this order which Jorge and Roberto have appealed to this Court.

1. The widow's legitime.

The appellant's do not question the legality of giving Marcelle one-half of the estate in full ownership.
They admit that the testator's dispositions impaired his widow's legitime. Indeed, under Art. 900 of the
Civil Code "If the only survivor is the widow or widower, she or he shall be entitled to one-half of the
hereditary estate." And since Marcelle alone survived the deceased, she is entitled to one-half of his
estate over which he could impose no burden, encumbrance, condition or substitution of any kind
whatsoever. (Art. 904, par. 2, Civil Code.)

It is the one-third usufruct over the free portion which the appellants question and justifiably so. It
appears that the court a quo approved the usufruct in favor of Marcelle because the testament provides
for a usufruct in her favor of one-third of the estate. The court a quo erred for Marcelle who is entitled
to one-half of the estate "en pleno dominio" as her legitime and which is more than what she is given
under the will is not entitled to have any additional share in the estate. To give Marcelle more than her
legitime will run counter to the testator's intention for as stated above his dispositions even impaired her
legitime and tended to favor Wanda.

2. The substitutions.

It may be useful to recall that "Substitution is the appoint- judgment of another heir so that he may
enter into the inheritance in default of the heir originally instituted." (Art. 857, Civil Code. And that there
are several kinds of substitutions, namely: simple or common, brief or compendious, reciprocal, and
fideicommissary (Art. 858, Civil Code.) According to Tolentino, "Although the Code enumerates four
classes, there are really only two principal classes of substitutions: the simple and the fideicommissary.
The others are merely variations of these two." (111 Civil Code, p. 185 [1973].)

The simple or vulgar is that provided in Art. 859 of the Civil Code which reads:

ART. 859. The testator may designate one or more persons to substitute the heir or heirs instituted in
case such heir or heirs should die before him, or should not wish, or should be incapacitated to accept
the inheritance.

A simple substitution, without a statement of the cases to which it refers, shall comprise the three
mentioned in the preceding paragraph, unless the testator has otherwise provided.
The fideicommissary substitution is described in the Civil Code as follows:

ART. 863. A fideicommissary substitution by virtue of which the fiduciary or first heir instituted is
entrusted with the obligation to preserve and to transmit to a second heir the whole or part of
inheritance, shall be valid and shall take effect, provided such substitution does not go beyond one
degree from the heir originally instituted, and provided further that the fiduciary or first heir and the
second heir are living at time of the death of the testator.

It will be noted that the testator provided for a vulgar substitution in respect of the legacies of Roberto
and Jorge Ramirez, the appellants, thus: con sustitucion vulgar a favor de sus respectivos descendientes,
y, en su defecto, con substitution vulgar reciprocal entre ambos.

The appellants do not question the legality of the substitution so provided. The appellants question the
sustitucion vulgar y fideicomisaria a favor de Da. Wanda de Wrobleski" in connection with the one-third
usufruct over the estate given to the widow Marcelle However, this question has become moot because
as We have ruled above, the widow is not entitled to any usufruct.

The appellants also question the sustitucion vulgar y fideicomisaria in connection with Wanda's usufruct
over two thirds of the estate in favor of Juan Pablo Jankowski and Horace v. Ramirez.

They allege that the substitution in its vulgar aspect as void because Wanda survived the testator or
stated differently because she did not predecease the testator. But dying before the testator is not the
only case for vulgar substitution for it also includes refusal or incapacity to accept the inheritance as
provided in Art. 859 of the Civil Code, supra. Hence, the vulgar substitution is valid.

As regards the substitution in its fideicommissary aspect, the appellants are correct in their claim that it
is void for the following reasons:

(a) The substitutes (Juan Pablo Jankowski and Horace V. Ramirez) are not related to Wanda, the heir
originally instituted. Art. 863 of the Civil Code validates a fideicommissary substitution "provided such
substitution does not go beyond one degree from the heir originally instituted."
What is meant by "one degree" from the first heir is explained by Tolentino as follows:

Scaevola Maura, and Traviesas construe "degree" as designation, substitution, or transmission. The
Supreme Court of Spain has decidedly adopted this construction. From this point of view, there can be
only one tranmission or substitution, and the substitute need not be related to the first heir. Manresa,
Morell and Sanchez Roman, however, construe the word "degree" as generation, and the present Code
has obviously followed this interpretation. by providing that the substitution shall not go beyond one
degree "from the heir originally instituted." The Code thus clearly indicates that the second heir must be
related to and be one generation from the first heir.

From this, it follows that the fideicommissary can only be either a child or a parent of the first heir. These
are the only relatives who are one generation or degree from the fiduciary (Op. cit., pp. 193-194.)

(b) There is no absolute duty imposed on Wanda to transmit the usufruct to the substitutes as required
by Arts. 865 and 867 of the Civil Code. In fact, the appellee admits "that the testator contradicts the
establishment of a fideicommissary substitution when he permits the properties subject of the usufruct
to be sold upon mutual agreement of the usufructuaries and the naked owners." (Brief, p. 26.)

3. The usufruct of Wanda.

The appellants claim that the usufruct over real properties of the estate in favor of Wanda is void
because it violates the constitutional prohibition against the acquisition of lands by aliens.

The 1935 Constitution which is controlling provides as follows:

SEC. 5. Save in cases of hereditary succession, no private agricultural land shall be transferred or
assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the
public domain in the Philippines. (Art. XIII.)

The court a quo upheld the validity of the usufruct given to Wanda on the ground that the Constitution
covers not only succession by operation of law but also testamentary succession. We are of the opinion
that the Constitutional provision which enables aliens to acquire private lands does not extend to
testamentary succession for otherwise the prohibition will be for naught and meaningless. Any alien
would be able to circumvent the prohibition by paying money to a Philippine landowner in exchange for
a devise of a piece of land.

This opinion notwithstanding, We uphold the usufruct in favor of Wanda because a usufruct, albeit a real
right, does not vest title to the land in the usufructuary and it is the vesting of title to land in favor of
aliens which is proscribed by the Constitution.

IN VIEW OF THE FOREGOING, the estate of Jose Eugenio Ramirez is hereby ordered distributed as
follows:

One-half (1/2) thereof to his widow as her legitime;

One-half (1/2) thereof which is the free portion to Roberto and Jorge Ramirez in naked ownership and
the usufruct to Wanda de Wrobleski with a simple substitution in favor of Juan Pablo Jankowski and
Horace V. Ramirez.

The distribution herein ordered supersedes that of the court a quo. No special pronouncement as to
costs.

SO ORDERED.

G.R. No. 194199, March 22, 2017

PROVINCE OF CAMARINES SUR, REPRESENTED BY GOVERNOR LUIS RAYMUND F. VILLAFUERTE, JR.,

Petitioner, v. BODEGA GLASSWARE, REPRESENTED BY ITS OWNER JOSEPH D. CABRAL, Respondent.

DECISION
JARDELEZA, J.:

The Case

This is a verified petition for review on certiorari1 under Rule 45 of the Rules of Court filed by petitioner
Province of Camarines Sur (petitioner) challenging the Decision2 of the Court of Appeals (CA)
promulgated on May 31, 2010 (assailed Decision) and its Resolution3 dated October 12, 2010 (assailed
Resolution). The assailed Decision affirmed the Decision4 of the Regional Trial Court of Naga City, Branch
26 (RTC Naga City), which in tum, reversed the ruling5 of the Municipal Trial Court of Naga City, Branch 2
(MTC Naga City) in the action for ejectment filed by the petitioner against respondent Bodega Glassware
(Bodega).

The Facts

Petitioner is the registered owner of a parcel of land in Peñafrancia, Naga City under Original Certificate
of Title (OCT) No. 22.6 On September 28, 1966, through then Provincial Governor Apolonio G. Maleniza,
petitioner donated around 600 square meters of this parcel of land to the Camarines Sur Teachers'
Association, Inc. (CASTEA) through a Deed of Donation Inter Vivos (Deed of Donation).7 The Deed of
Donation included an automatic revocation clause which states:

That the condition of this donation is that the DONEE shall use the above-described portion of land
subject of the present donation for no other purpose except the construction of its building to be owned
and to be constructed by the above-named DONEE to house its offices to be used by the said Camarines
Sur Teachers' Association, Inc., in connection with its functions under its charter and by-laws and the
Naga City Teachers' Association as well as the Camarines Sur High School Alumni Association, PROVIDED
FURTHERMORE, that the DONEE shall not sell, mortgage or incumber the property herein donated
including any and all improvements thereon in favor of any party and provided, lastly, that the
construction of the building or buildings referred to above shall be commenced within a period of one
(1) year from and after the execution of this donation, otherwise, this donation shall be deemed
automatically revoked and voided and of no further force and effect.8
CASTEA accepted the donation in accordance with the formalities of law and complied with the
conditions stated in the deed. However, on August 15, 1995, CASTEA entered into a Contract of Lease
with Bodega over the donated property.9 Under the Contract of Lease, CASTEA leased the property to
Bodega for a period of 20 years commencing on September 1, 1995 and ending on September 15, 2015.
Bodega took actual possession of the property on September 1, 1995.10

Sometime in July 2005, the Office of the Provincial Legal Officer of the Province of Camarines Sur wrote
Bodega regarding the building it built on the property. The Provincial Legal Officer requested Bodega to
show proof of ownership or any other legal document as legal basis for his possession. Bodega failed to
present any proof. Nevertheless, petitioner left Bodega undisturbed and merely tolerated its possession
of the property.11

On November 11, 2007, petitioner sent a letter to Bodega dated October 4, 2007.12 In this letter,
petitioner stated that Bodega's occupation of the property was by mere tolerance of the petitioner.13 As
it now intended to use the property for its developmental projects, petitioner demanded that Bodega
vacate the property and surrender its peaceful possession. Bodega refused to comply with the
demand.14

Petitioner, through its then Provincial Governor Luis Raymund F. Villafuerte, Jr., revoked its donation
through a Deed of Revocation of Donation15 (Deed of Revocation) dated October 14, 2007. It asserted
that CASTEA violated the conditions in the Deed of Donation when it leased the property to Bodega.
Thus, invoking the automatic revocation clause in the Deed of Donation, petitioner revoked, annulled
and declared void the Deed of Donation.16 It appears from the record that CASTEA never challenged this
revocation.

On March 13, 2008, petitioner filed an action for unlawful detainer against Bodega before the MTC Naga
City. It prayed that Bodega be ordered to vacate the property and surrender to petitioner its peaceful
possession. Petitioner also prayed for the payment of P15,000 a month from October 2007 until Bodega
vacates the land.17

In a Decision18 dated December 11, 2008, the MTC Naga City ruled in favor of the petitioner. It ordered
Bodega to vacate the property and to pay P15,000 a month as reasonable compensation.19 The
dispositive portion of this Decision states:
Wherefore, the foregoing premises considered, plaintiff having established by preponderance of
evidence its cause of action against the defendant, the latter is ordered:

1)

To immediately vacate and surrender to plaintiff, Province of Camarines Sur, the peaceful possession of
the portion of the land covered by Original Certificate of Title No. 22 registered in the name of the
plaintiff with an area of Six Hundred (600) square meters subject of the lease contract executed by
CASTEA in favor of the herein defendant dated 7 September 1995 where the defendants (sic) building is
constructed, and,

2)

[T]o pay plaintiff the amount of Php15,000.00 a month from date of judicial demand until it vacates the
subject properties as reasonable compensation for the use of the same.

Defendant's counterclaim is hereby ordered DISMISSED with costs against defendant.20

Bodega appealed this Decision to the RTC Naga City which reversed it in a Decision21 dated May 13,
2009. The dispositive portion states:

WHEREFORE premises considered, the decision of the court a quo is hereby reversed and set aside and a
new one entered DISMISSING the above case for failure of the plaintiff to present evidence to sustain its
cause of action[.]22

The petitioner then went up on appeal to the CA which rendered the now assailed Decision. The CA
disposed of the appeal thus:

WHEREFORE, premises considered, the appeal is hereby DENIED. The Decision dated May 13, 2009 of
the Regional Trial Court, Branch 26, Naga City is hereby AFFIRMED.23
In its assailed Decision, the CA affirmed the ruling of the RTC Naga City that the petitioner cannot
demand that Bodega vacate the property. The CA explained that Bodega 's possession of the property is
based on its Contract of Lease with CASTEA. CASTEA, in tum, claims ownership of the property by virtue
of the Deed of Donation. According to the CA, while petitioner alleges that CASTEA violated the
conditions of the donation and thus, the automatic revocation clause applies, it should have first filed an
action for reconveyance of the property against CASTEA. The CA theorized that judicial intervention is
necessary to ascertain if the automatic revocation clause suffices to declare the donation revoked. In
support of its argument, the CA cited the ruling of this Court in Roman Catholic Archbishop of Manila v.
Court of Appeals.24

The CA also found that petitioner's action has already prescribed. According to it, Article 1144(1) of the
Civil Code applies in this case. Thus, petitioner had 10 years to file an action for reconveyance from the
time the Deed of Donation was violated. As the Contract of Lease was entered into on September 1,
1995, petitioner, thus, had 10 years from this date to file the action. Unfortunately, the action for
unlawful detainer was filed more than 12 years later. Further, the CA added that even the revocation of
the donation was done beyond the 10-year prescriptive period. The CA also denied petitioner ' s motion
for reconsideration.25

Petitioner filed this verified petition for review on certiorari challenging the assailed Decision. It argues
that the CA wrongly applied the doctrine in Roman Catholic Archbishop of Manila. It asserts that the
assailed Decision in fact categorically stated that in donations containing an automatic revocation clause,
judicial intervention is not necessary for the purpose of effectively revoking the donation. Such a
revocation is valid subject to judicial intervention only when its propriety is challenged in court.26

In its comment, Bodega anchors its right of possession on its Contract of Lease with CASTEA. It insists
that the Contract of Lease is valid because CASTEA is the owner of the property. The automatic
revocation clause did not immediately revoke the donation in the absence of a judicial declaration. It
also agrees with the CA that the petitioner's action has already prescribed.27

The Issues
The core issue in this case is who between petitioner and Bodega has the right to the actual physical
possession of the property. The resolution of this issue requires us to look into the basis of their claims
of possession. Essential to this is the determination of the effect of the automatic revocation clause in
the Deed of Donation. We note, however, that an action for unlawful detainer pertains only to the issue
of possession de facto or actual possession. Thus while we may rule on the basis of the parties' claims of
possession—which, in the case of the petitioner, involves an assertion of ownership—this determination
is only provisional and done solely to settle the question of possession .

The Ruling of the Court

Rule 70 of the Rules of Court covers the ejectment cases of forcible entry and unlawful detainer. These
actions are summary proceedings and are devised to provide for a particular remedy for a very specific
issue. Actions for unlawful detainer and forcible entry involve only the question of actual possession.28
In these actions, courts are asked to ascertain which between the parties has the right to the possession
de facto or physical possession of the property in question.29 Its purpose is to restore the aggrieved
party to possession if he or she successfully establishes his or her right to possess the property. The
essence of an ejectment suit is for the rightful possessor to lawfully recover the property through lawful
means instead of unlawfully wresting possession of the property from its current occupant.30 Thus, an
action for unlawful detainer or forcible entry is a summary proceeding and is an expeditious means to
recover possession. If the parties raise the issue of ownership, courts may only pass upon that issue for
the purpose of ascertaining who has the better right of possession.31 Any ruling involving ownership is
not final and binding. It is merely provisional and does not bar an action between the same parties
regarding the title of the property.32

An action for unlawful detainer, as in this case, pertains to specific circumstances of dispossession. It
refers to a situation where the current occupant of the property initially obtained possession lawfully.33
This possession only became unlawful due to the expiration of the right to possess which may be a
contract, express or implied, or by mere tolerance.34

An action for unlawful detainer must allege and establish the following key jurisdictional facts:

(1)

initially, possession of property by the defendant was by contract with or by tolerance of the plaintiff;
(2)

eventually, such possession became illegal upon notice by plaintiff to defendant of the termination of the
latter's right of possession;

(3)

thereafter, the defendant remained in possession of the property and deprived the plaintiff of the
enjoyment thereof; and

(4)

within one year from the last demand on defendant to vacate the property, the plaintiff instituted the
complaint for ejectment.35

When in an unlawful detainer action, the party seeking recovery of possession alleges that the opposing
party occupied the subject property by mere tolerance, this must be alleged clearly and the acts of
tolerance established.36 Further, the party seeking possession must identify the source of his or her
claim as well as satisfactorily present evidence establishing it.

In this case, petitioner alleged that as early as 2005, it had asked Bodega to present proof of its legal
basis for occupying the property. Bodega, however, failed to heed this demand. For several years,
petitioner merely tolerated Bodega's possession by allowing it to continue using its building and
conducting business on the property. Petitioner demanded that Bodega vacate the property in
November 2007. This presents a clear case of unlawful detainer based on mere tolerance.

Petitioner proceeds to argue that its right of possession is based on its ownership. This, in turn, is hinged
on its position that the property reverted back to the petitioner when the donation was revoked as
provided in the automatic revocation clause in the Deed of Donation.

We shall rule on the effect of the automatic revocation clause for the purpose of ascertaining who
between petitioner and Bodega has the right to possess the property.

This Court has affirmed the validity of an automatic revocation clause in donations in the case of De Luna
v. Abrigo37 promulgated in 1990. We explained the nature of automatic revocation clauses by first
identifying the three categories of donation. In De Luna, we said that a donation may be simple,
remuneratory or onerous. A donation is simple when the cause is the donor's pure liberality. It is
remuneratory when the donor "gives something to reward past or future services or because of future
charges or burdens, when the value of said services, burdens or charges is less than the value of the
donation."38 A donation is onerous when it is "subject to burdens, charges, or future services equal (or
more) in value than that of the thing donated x x x."39 This Court found that the donation in De Luna
was onerous as it required the donee to build a chapel, a nursery, and a kindergarten. We then went on
to explain that an onerous donation is governed by the law on contracts and not by the law on
donations. It is within this context that this Court found an automatic revocation clause as valid.

We explained in De Luna that Article 1306 of the Civil Code allows the parties "to establish such
stipulations, clauses , terms and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order or public policy."40 In contracts law, parties may
agree to give one or both of them the right to rescind a contract unilaterally. This is akin to an automatic
revocation clause in an onerous donation. The jurisprudence on automatic rescission in the field of
contracts law therefore applies in an automatic revocation clause.

Hence, in De Luna, we applied our rulings in University of the Philippines v. De los Angeles41 and Angeles
v. Calasanz42 where we held that an automatic rescission clause effectively rescinds the contract upon
breach without need of any judicial declaration.

In University of the Philippines, this Court held that a party to a contract with an automatic rescission
clause, who believes that there has been a breach warranting rescission, may consider the contract
rescinded without previous court action. Speaking through Justice J.B.L. Reyes, we said:

x x x [T]he law definitely does not require that the contracting party who believes itself injured must first
file suit and wait for a judgment before taking extrajudicial steps to protect its interest. Otherwise, the
party injured by the other's breach will have to passively sit and watch its damages accumulate during
the pendency of the suit until the final judgment of rescission is rendered when the law itself requires
that he should exercise due diligence to minimize its own damages x x x.43
We, however, clarified that the other party may contest the extrajudicial rescission in court in case of
abuse or error by the rescinder. It is only in this case where a judicial resolution of the issue becomes
necessary.

Applying this to the automatic revocation clause, we ruled in De Luna that:

It is clear, however, that judicial intervention is necessary not for purposes of obtaining a judicial
declaration rescinding a contract already deemed rescinded by virtue of an agreement providing for
rescission even without judicial intervention, but in order to determine whether or not the rescission
was proper.44

While the ruling in De Luna applied specifically to onerous donations with an automatic revocation
clause, we extended this doctrine to apply to donations inter vivos in general in Roman Catholic
Archbishop of Manila. We explained in this case that Article 732 of the Civil Code states that the general
provisions on obligations and contracts shall govern donations inter vivos in all matters not determined
in Title III, Book III on donations. Title III has no explicit provisions for instances where a donation has an
automatic revocation clause. Thus, the rules in contracts law regarding automatic rescission of contracts
as well as the jurisprudence explaining it find suppletory application. We then reiterated in Roman
Catholic Archbishop of Manila that where a donation has an automatic revocation clause, the occurrence
of the condition agreed to by the parties as to cause the revocation, is sufficient for a party to consider
the donation revoked without need of any judicial action. A judicial finding that the revocation is proper
is only necessary when the other party actually goes to court for the specific purpose of challenging the
propriety of the revocation. Nevertheless, even in such a case, "x x x the decision of the court will be
merely declaratory of the revocation, but it is not in itself the revocatory act."45 We also explained in
this case that in ascertaining the prescription of actions arising from an automatic revocation clause in
donations, the general provisions on prescription under the Civil Code apply. Article 764—which
provides for a four-year prescriptive period to file an action to revoke the donation in case of breach of a
condition—governs an instance where the deed of donation does not contain an automatic revocation
clause.46

We repeated this ruling in Dolar v. Barangay Lublub (Now P.D. Monfort North) Municipality of
Dumangas.47 We once again held that if a contract of donation provides for automatic rescission or
reversion in case of a breach of a condition and the donee violates it or fails to comply with it, the
property donated automatically reverts back to the donor without need of any judicial declaration. It is
onl y when the donee denies the rescission or challenges its propriety that the court can intervene to
conclusively settle whether the resolution was proper. This was also the import of our ruling in
Zamboanga Barter Traders Kilusang Bayan, Inc. v. Plagata.48

In this case, the Deed of Donation contains a clear automatic revocation clause. The clause states:

That the condition of this donation is that the DONEE shall use the above-described portion of land
subject of the present donation for no other purpose except the construction of its building to be owned
and to be constructed by the above-named DONEE to house its offices to be used by the said Camarines
Sur Teachers' Association, Inc., in connection with its function s under its charter and by-laws and the
Naga City Teachers' Association as well as the Camarines Sur High School Alumni Association, PROVIDED
FURTHERMORE, that the DONEE shall not sell, mortgage or incumber the property here in donated
including any and all improvements thereon in favor of any party and provided, lastly, that the
construction of the building or buildings referred to above shall be commenced within a period of one
(1) year from and after the execution of this donation, otherwise, this donation shall be deemed
automatically revoked and voided and of no further force and effect.49

The provision identifies three conditions for the donation: (1) that the property shall be used for "no
other purpose except the construction of its building to be owned and to be constructed by the above-
named DONEE to house its offices to be used by the said Camarines Sur Teachers' Association, Inc., in
connection with its functions under its charter and by-laws and the Naga City Teachers' Association as
well as the Camarines Sur High School Alumni Association," (2) CASTEA shall "not sell, mortgage or
incumber the property herein donated including any and all improvements thereon in favor of any
party," and (3) "the construction of the building or buildings referred to above shall be commenced
within a period of one (1) year from and after the execution." The last clause of this paragraph states
that "otherwise, this donation shall be deemed automatically revoked x x x."50 We read the final clause
of this provision as an automatic revocation clause which pertains to all three conditions of the donation.
When CASTEA leased the property to Bodega, it breached the first and second conditions.

Accordingly, petitioner takes the position that when CASTEA leased the property to Bodega, it violated
the conditions in the Deed of Donation and as such, the property automatically reverted to it. It even
executed a Deed of Revocation. The records show that CASTEA never contested this revocation. Hence,
applying the ruling in De Luna, Roman Catholic Archbishop of Manila, Dolor and Zamboanga Barter
Traders Kilusang Bayan, Inc., petitioner validly considered the donation revoked and by virtue of the
automatic revocation clause, this revocation was automatic and immediate, without need of judicial
intervention. Thus, the CA clearly erred in its finding that petitioner should have first filed an action for
reconveyance. This contradicts the doctrine stated in the aforementioned cases and renders nugatory
the very essence of an automatic revocation clause.

Thus, as petitioner validly considered the donation revoked and CASTEA never contested it, the property
donated effectively reverted back to it as owner. In demanding the return of the property, petitioner
sources its right of possession on its ownership. Under Article 428 of the Civil Code, the owner has a
right of action against the holder and possessor of the thing in order to recover it.

This right of possession prevails over Bodega's claim which is anchored on its Contract of Lease with
CASTEA. CASTEA's act of leasing the property to Bodega, in breach of the conditions stated in the Deed
of Donation, is the very same act which caused the automatic revocation of the donation. Thus, it had no
right, either as an owner or as an authorized administrator of the property to lease it to Bodega. While a
lessor need not be the owner of the property leased, he or she must, at the very least, have the
authority to lease it out.51 None exists in this case. Bodega finds no basis for its continued possession of
the property.

As to the question of prescription, we rule that the petitioner's right to file this ejectment suit against
Bodega has not prescribed.

First, we reiterate that jurisprudence has definitively declared that Article 764 on the prescription of
actions for the revocation of a donation does not apply in cases where the donation has an automatic
revocation clause.52 This is necessarily so because Article 764 speaks of a judicial action for the
revocation of a donation. It cannot govern cases where a breach of a condition automatically, and
without need of judicial intervention, revokes the donation.

Second, we cannot agree with the ruling of the CA that the petitioner should have first filed an action for
reconveyance of the property, and that petitioner's action has prescribed since it did not file the action
within 10 years. This reveals a failure to understand the nature of a donation with an automatic
revocation clause. At the risk of repetition, the breach of the condition in the donation causes the
automatic revocation. All the donor has to do is to formally inform the donee of the revocation. Judicial
intervention only becomes necessary if the donee questions the propriety of the revocation. Even then,
judicial intervention is required to merely confinn and not order the revocation. Hence, there can be no
10-year prescriptive period to file an action to speak of. When the donee does not contest the
revocation, no court action is necessary.
Third, as owner of the property in this case, the petitioner is entitled to its possession. The petitioner's
action for ejectment is anchored on this right to possess. Under the Civil Code and the Rules of Court, a
party seeking to eject another from a property for unlawful detainer must file the action for ejectment
within one year from the last demand to vacate.53 This is the prescriptive period that the petitioner is
bound to comply with in this case. The records show that the petitioner served its last demand letter on
November 11, 2007. It filed the action for ejectment on March 13, 2008 or around four months from the
last demand. The action is clearly within the prescriptive period.

We also affirm the grant of damages in favor of the petitioner.

Section 17 of Rule 70 of the Rules of Court provides:

Sec. 17. Judgment. - If after trial the court finds that the allegations of the complaint are true, it shall
render judgment in favor of the plaintiff for the restitution of the premises, the sum justly due as arrears
of rent or as reasonable compensation for the use and occupation of the premises, attorney's fees and
costs. x x x (Emphasis supplied.)

Thus, the rightful possessor in an unlawful detainer case is entitled to recover damages, which refer to
"rents" or "the reasonable compensation for the use and occupation of the premises," or "fair rental
value of the property"54 and attorney's fees and costs. More specifically, recoverable damages are
"those which the plaintiff could have sustained as a mere possessor, or those caused by the loss of the
use and occupation of the property."55

In this case, the petitioner prayed for the award of P15,000 monthly as damages. Petitioner argued that
considering that the Contract of Lease between CASTEA and Bodega shows that the monthly rent for the
property is P30,000, the amount of P15,000 which it prays for is fair and reasonable.56 We agree with
the petitioner's position. The amount of rent in the Contract of Lease is evidence of the fair rental value
of the property. That the petitioner asked for half of this amount as damages is reasonable given the
circumstances.
WHEREFORE, the petltwn is PARTIALLY GRANTED. The Decision of the Court of Appeals dated May 31,
2010 which AFFIRMED the Decision of the RTC of Naga City Branch 26 dated May 13, 2009 is REVERSED
and SET ASIDE. The Decision of the MTC Naga City is REINSTATED.

SO ORDERED.