Central Philippine University vs. Court of Appeals

An onerous donation containing a resolutory condition is revoked upon the donee's failure to comply with the condition within a reasonable time, and an action for such revocation is not barred by prescription where the period for compliance is not fixed and depends on the donee's will.

In 1939, Don Ramon Lopez, Sr., a trustee of Central Philippine College (now CPU), donated a parcel of land to CPU. The deed of donation, annotated on the certificate of title, imposed conditions: the land was to be used exclusively for a medical college, it could not be sold or encumbered, and it was to be called the "Ramon Lopez Campus" with a fund for improvements. For fifty years, CPU did not establish the medical college. In 1989, the donor's heirs (private respondents) filed an action for annulment of donation, reconveyance, and damages.

• Nature of the Donation: In 1939, Don Ramon Lopez, Sr. executed a deed of donation of a parcel of land (Lot No. 3174-B-1) in favor of Central Philippine University (CPU). The deed contained conditions annotated on the Transfer Certificate of Title, obligating CPU to utilize the land exclusively for a medical college, not to sell or encumber it, and to name it the "Ramon Lopez Campus."
• Non-compliance: From 1939 until the filing of the action in 1989, CPU did not establish a medical college on the donated property.
• Action for Revocation: The heirs of Don Ramon Lopez, Sr. (private respondents) filed an action for annulment of the donation, reconveyance, and damages, alleging breach of the donation's conditions.
• CPU's Defense: CPU argued that the action had prescribed and that it had not violated the conditions, as it never used the property for any other purpose.
• Lower Court Findings: The RTC found CPU had failed to comply with the conditions and ordered reconveyance. The CA, while characterizing the conditions as resolutory, found no fixed period for compliance and remanded the case for such determination.

• Prescription: Petitioner CPU maintained that the private respondents' action had prescribed. It argued that the right to seek revocation accrued in 1939 upon execution of the donation, and the action filed fifty years later was barred by the statute of limitations.
• Nature of Conditions: Petitioner contended that the annotations on the title were not onerous obligations or resolutory conditions, the breach of which would render the donation revocable.
• Error in Remand: Petitioner alleged the CA erred in remanding the case to fix a period for compliance, asserting that no such period was intended and the donation should be upheld.

• Breach of Condition: Respondents (the heirs) countered that CPU's failure for over fifty years to establish a medical college constituted a clear breach of the essential condition of the donation, warranting its revocation.
• Non-Prescription: Respondents argued that the action had not prescribed because the period for compliance depended solely on the donee's will, and a reasonable time for compliance had not yet expired until the filing of the suit.
• Onerous Donation: Respondents characterized the donation as onerous, subject to the rules on contracts, and maintained that CPU's non-fulfillment entitled them to rescission.

• Nature of Donation: Whether the donation is onerous and the conditions imposed are resolutory in nature.
• Prescription: Whether the action for revocation of the donation is barred by prescription.
• Remand for Period Fixing: Whether the Court of Appeals correctly remanded the case to fix a period for CPU's compliance with the condition.

• Nature of Donation: The donation is onerous because it imposed a substantial burden on the donee equivalent to the value of the donation itself. The condition to establish a medical college is a resolutory condition; non-compliance results in the extinguishment of the donee's rights and revocation of the donation.
• Prescription: The action for revocation is not barred by prescription. The period for compliance was not fixed and depended upon the exclusive will of the donee (CPU). The cause of action accrued only after the expiration of a reasonable time for compliance. A period of fifty years was more than reasonable, and the action filed thereafter was timely.
• Remand for Period Fixing: The CA's remand to fix a period for compliance was erroneous. Given the passage of more than fifty years without compliance, fixing a period would be a mere formality serving no purpose but to delay the proceedings. Under Article 1191 of the Civil Code, rescission is proper when there is no just cause for the court to fix a period.

• Onerous Donation — A donation is onerous if it imposes a burden on the donee equivalent to the value of the donation itself. It is governed by the rules on contracts (Article 733, Civil Code). In this case, the obligation to establish a medical college constituted such a burden.
• Resolutory Condition in Donations — In a conditional obligation, a resolutory condition is one the fulfillment of which extinguishes the rights already acquired. In donations, non-compliance with a resolutory condition revokes the donation and terminates the donee's rights.
• Prescription of Action for Revocation — When the period for compliance with a condition in an onerous donation is not fixed and depends on the donee's will, the cause of action for revocation accrues only after the expiration of a reasonable time for compliance. The action is not barred by prescription if filed within the prescriptive period from that accrual.

• "A clear perusal of the conditions set forth in the deed of donation executed by Don Ramon Lopez, Sr., gives us no alternative but to conclude that his donation was onerous, one executed for a valuable consideration which is considered the equivalent of the donation itself..."
• "More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of the opportunity to comply with the condition even if it be burdensome, to make the donation in its favor forever valid. But, unfortunately, it failed to do so."
• "Since the time within which the condition should be fulfilled depended upon the exclusive will of the petitioner, it has been held that its absolute acceptance and the acknowledgment of its obligation provided in the deed of donation were sufficient to prevent the statute of limitations from barring the action of private respondents..."

• Parks v. Province of Tarlac, 49 Phil. 142 (1926) — Cited for the principle that an action for revocation of a donation for non-compliance with conditions is prescriptible and governed by the law on contracts when the donation is onerous.
• City of Manila v. Rizal Park Co., 53 Phil. 515 (1929) — Used as an example of an onerous donation where land was given to the City of Manila with the obligation to erect schools and a playground.
• Osmeña v. Rama, 14 Phil. 99 (1909) — Referred to in the dissent regarding the application of prescription to obligations dependent on the debtor's will, though the majority distinguished its application.

• Article 733, Civil Code — Provides that onerous donations are governed by the rules on contracts. Applied to classify the donation and determine the applicable prescriptive rules.
• Article 1181, Civil Code — Defines conditional obligations, where the acquisition or extinguishment of rights depends upon a future and uncertain event. Used to characterize the condition as resolutory.
• Article 1191, Civil Code — Grants the power to rescind obligations in reciprocal ones when one party fails to comply. Applied to justify revocation without first fixing a period for compliance.
• Article 1197, Civil Code — Allows courts to fix a period for obligations when not fixed by the parties. The Court found its application unnecessary given the unreasonable delay.
• Article 1378, Civil Code — States that doubts in gratuitous contracts should be resolved in favor of the least transmission of rights. Cited to support revocation.

• Justice Josue N. Bellosillo (Ponente)
• Justice Regino C. Hermosisima, Jr.
• Justice Vicente V. Mendoza

• Justice Santiago M. Kapunan — The dissent argued that the donation was more properly a "modal donation" (a species of onerous donation) and that the "conditions" were actually the obligations themselves, not resolutory conditions in the technical sense. It contended that the action was prescriptible under the general rules on contracts (10 years under Article 1144) and that the Court should have fixed a period for compliance under Article 1197 before decreeing revocation. The dissent also noted an inconsistency in the majority opinion describing the donation as both onerous and basically gratuitous.