City of Angeles vs. Court of Appeals

A mandatory donation of open space under P.D. No. 1216 may be subject to valid conditions imposed by the donor, but any condition contrary to law — such as requiring construction on non-buildable open space — is void and cannot serve as a basis for revocation; where both parties are at fault for agreeing to an illegal stipulation, neither may recover what was given or demand performance from the other under Article 1412 of the Civil Code, and the donated land remains with the donee as perpetually part of the public domain.

Timog Silangan Development Corporation was the owner and developer of Timog Park, a residential subdivision in Angeles City. Presidential Decree No. 1216, issued on October 14, 1977, amended Section 31 of P.D. No. 957 to mandate that subdivision owners or developers reserve a percentage of the gross area of their projects as open space exclusively for parks, playgrounds, and recreational use, and to donate such open space to the city or municipality upon completion. The decree declared these open spaces as non-alienable public lands and non-buildable. The relationship between the parties was defined by a series of deeds of donation through which Timog Silangan conveyed portions of its subdivision to the City of Angeles, subject to conditions regarding the use of the donated land.

Timog Silangan Development Corporation owned and developed Timog Park, a residential subdivision in Angeles City. Through a series of deeds — the first dated March 9, 1984, superseded by another dated September 27, 1984, and finally by an Amended Deed of Donation dated November 26, 1984 — Timog Silangan donated to the City of Angeles fifty-one parcels of land situated in Barrio Pampang, with an aggregate area of approximately 50,676 square meters, constituting more than five percent of the total land area of the subdivision. The amended deed specified that the properties donated were to be devoted and utilized solely for the site of the Angeles City Sports Center, excluding cockfighting, pursuant to plans to be submitted by the donee to the donor for approval within six months. It prohibited the construction of commercial buildings, markets, or mass tenement housing on the donated land, and required that construction of the Sports Center commence within one year from March 9, 1984 and be completed within five years. The deed further declared the donated properties as the entire open space for the donor's subdivision, released the donor from obligations appertaining to the properties, and provided that any substantial breach of the foregoing provisos would entitle the donor to revoke or rescind the deed, with the donee obligated to vacate and return the premises peacefully without judicial action.

On July 19, 1988, the City of Angeles began constructing a drug rehabilitation center on a portion of the donated land. Upon learning of this, Timog Silangan protested, asserting that the construction violated the terms and conditions of the amended deed and was prejudicial to the interests of its clients and subdivision residents. The developer offered an alternative site for the rehabilitation center, but the city rejected it on the ground that it was too isolated and lacked electric and water facilities. The city maintained that the construction was not violative of the donation's terms.

On August 8, 1988, Timog Silangan filed a complaint with the Regional Trial Court, Branch 56, in Angeles City, alleging breach of the conditions imposed in the amended deed and seeking revocation of the donation, damages, and a preliminary injunction or temporary restraining order to halt construction. The trial court issued a temporary restraining order on August 10, 1988, when construction was already forty percent complete, but subsequently denied the prayer for preliminary injunction based on the prohibition in Presidential Decree No. 1818. In their answer with counterclaim, the city officials admitted the commencement of construction but contended that the conditions in the amended deed were contrary to Municipal Ordinance No. 1, Series of 1962, the Subdivision Ordinance of the Municipality of Angeles. They also asserted that Timog Silangan had no right to dictate the use of the donated land so long as it remained for public use, and that the cause of action had become moot when the Angeles City Council repealed the resolution authorizing the drug rehabilitation center and adopted a new resolution changing its purpose to a "sports development and youth center."

The trial court rendered judgment on February 15, 1989, finding no inconsistency between the deed's conditions and the Subdivision Ordinance, holding that a drug rehabilitation center was not a "public use" contemplated by the ordinance's open space requirement, and ruling that the city council's belated ordinance changing the center's purpose came too late. The court also noted the city's failure to submit the plan for the Sports Center within six months and to commence construction within five years, both substantial violations of the amended deed. The trial court declared the deed revoked and rescinded, ordered the city to vacate and return the donated land with all improvements, and perpetually enjoined the city from constructing a drug rehabilitation center or any other building on the donated land. In April 1989, while the appeal was pending, the city inaugurated the drug rehabilitation center — an act the appellate court characterized as a mockery of the judicial system. The Court of Appeals affirmed the trial court's decision on October 31, 1990, and denied the petitioners' motion for reconsideration.

• Mandatory Donation Must Be Unconditional: Petitioners argued that because P.D. No. 1216 requires the developer to donate open space, the donation should be absolute and the donor has no right to impose conditions on its use, since the use of open spaces is already governed by the decree. Consequently, the conditions in the amended deed were deemed not written, and no violation could have occurred.
• Percentage Based on Gross Area: Petitioners contended that the 3.5% to 9% allotted for parks, playgrounds, and recreational uses under Section 31 of P.D. No. 957, as amended, should be based on the gross area of the entire subdivision, not merely on the area of the open space alone.
• No Injunction of Completed Acts: Petitioners maintained that the court could not enjoin the construction of the drug rehabilitation center because the trial court's decision was rendered only after the construction was completed, and injunction cannot lie against events that have already transpired.
• Mootness Due to Repeal: Petitioners asserted that the cause of action became moot and academic when the Angeles City Council repealed the resolution authorizing the drug rehabilitation center and adopted a new resolution changing its purpose to a "sports development and youth center."

• Breach of Conditions Warrants Revocation: Private respondent contended that the construction of the drug rehabilitation center violated the Amended Deed of Donation, and that under Article 764 of the Civil Code and stipulation no. 8 of the amended deed, the donor was empowered to revoke the donation when the donee failed to comply with any of the conditions imposed.
• Continuing Act Subject to Injunction: Private respondent countered that the operation of the drug rehabilitation center was a continuing act causing injury to the developer, its clients, and subdivision residents, and was therefore a proper subject of injunction, as equity should grant injunctive relief where persistent repetition of the wrong is threatened.

• Obligation to Donate: Whether a subdivision owner/developer is legally bound under P.D. No. 1216 to donate to the city or municipality the open space allocated exclusively for parks, playgrounds, and recreational use.
• Basis of Percentage: Whether the percentage of the open space allocated exclusively for parks, playgrounds, and recreational use is to be based on the gross area of the subdivision or on the total area reserved for open space.
• Validity of Conditions: Whether the private respondent as subdivision owner/developer may validly impose conditions in the Amended Deed of Donation regarding the use of the open space allocated exclusively for parks and playgrounds.
• Injunction: Whether the construction of the drug rehabilitation center on the donated open space may be enjoined.
• Revocation: Whether the donation of the open space in favor of the City of Angeles may be revoked for alleged violation of the Amended Deed of Donation.

• Obligation to Donate: Yes. Under Section 31 of P.D. No. 957 as amended by P.D. No. 1216, the owner or developer is legally obligated to donate the open space to the city or municipality, and it is mandatory for the local government to accept.
• Basis of Percentage: Yes, the 3.5%–9% allocation is based on the gross area of the entire subdivision, not merely the open space area, as logic and statutory purpose dictate.
• Validity of Conditions: Yes, conditions may be imposed on a mandatory donation, provided they are not contrary to law, morals, good customs, public order, or public policy; however, the condition requiring construction of a sports complex on non-buildable open space was void.
• Injunction: Yes. The construction and operation of a drug rehabilitation center on non-buildable open space was a continuing violation of law and was properly enjoined.
• Revocation: No. The donation could not be revoked because the breached condition was contrary to law and therefore void, and both parties were at fault under Article 1412 of the Civil Code; the donated land must remain perpetually part of the public domain.

• Obligation to Donate: The original Section 31 of P.D. No. 957 made donation optional on the part of the owner or developer. The amendment introduced by P.D. No. 1216 changed the language to mandatory: the roads, alleys, sidewalks, and playgrounds "shall be donated" by the owner or developer to the city or municipality, and it shall be "mandatory for the local governments to accept." Although a proviso allows parks and playgrounds to be donated to the homeowners' association with the consent of the city or municipality, this option does not alter the mandatory character of the obligation — the donation must be made regardless of which donee is chosen. The consent requirement before donation to the homeowners' association further emphasizes the mandatory nature of the provision.

• Basis of Percentage: The phrase "gross area" was used four times in the same section, the first instance clearly referring to the total area of the subdivision ("30% of the gross area for open space"). Logic dictates that the same basis applies to the succeeding instances ("9% of gross area," "7% of gross area," "3.5% of gross area"). Construing the percentages as applying to the totality of the open space alone would result in far too small an area devoted to parks and playgrounds, defeating the statute's purpose. P.D. No. 1216 was intended as a compromise between environmental planning and economic feasibility, reducing the required area from thirty percent under P.D. No. 953 to 3.5%–9% of the entire subdivision area.

• Validity of Conditions: The general law on donations (Article 727 of the Civil Code) does not prohibit the imposition of conditions so long as they are not illegal or impossible. Neither P.D. No. 957 nor P.D. No. 1216 prohibits conditions on donations of open space. Any condition may be imposed provided it is not contrary to law, morals, good customs, public order, or public policy. The contention that the donation should be unconditional because it is mandatory has no basis in law. However, P.D. No. 1216 declares that the 3.5%–9% area set for parks, playgrounds, and recreational use is "non-buildable." This non-buildability restriction applies only to the area required by the decree; any excess land over and above the statutory minimum would not be covered. In this case, the subdivision fell under the medium-density or economic housing category (requiring 7% of gross area), and the donated land constituted only a little more than 5% of the gross area — less than the required non-buildable area. There was therefore no excess land, and the condition to build a sports complex on the donated land was contrary to law and considered as not imposed.

• Injunction: Under Section 31 of P.D. No. 957 as amended, the open space for parks, playgrounds, and recreational areas is declared non-buildable. The construction and operation of a drug rehabilitation center on such land constituted a continuing violation of law and was properly enjoined. Moreover, the factual background warranted ruling against petitioners: they had taken refuge under P.D. No. 1818 to continue construction, claimed to have abandoned the drug rehabilitation center plans by changing its purpose to a "sports development and youth center," yet inaugurated the center on April 15, 1989, after judgment was rendered — an act constituting a mockery of the judicial system. Under Section 4 of Rule 39 of the Rules of Court, a judgment in an action for injunction is not stayed after rendition and before or during appeal. The cease-and-desist order therefore remained in full force and effect.

• Revocation: Article 1412 of the Civil Code provides that when the fault is on the part of both contracting parties to an unlawful cause, neither may recover what was given by virtue of the contract or demand performance of the other's undertaking. Both parties were in violation of P.D. No. 957 as amended: the donor for donating less than the required open space and agreeing to a sports complex on non-buildable land, and the donee for accepting such a donation and constructing a drug rehabilitation center on the same non-buildable area. Since the condition to construct a sports complex was contrary to law, stipulation no. 8 of the amended deed (providing for revocation upon breach) could not be implemented because no valid stipulation had been breached. Furthermore, the non-alienable character of the open space, declared by P.D. No. 1216 as "beyond the commerce of men," made it highly improbable that the decree would allow return of the donated land under any circumstance. As a matter of public policy, the developer could not be allowed to evade its statutory obligation to donate the required open space by invoking the donee's breach of an illegal condition. The courts will not aid either party to enforce an illegal contract but will leave them both where they find them. The donated land must remain with the donee as perpetually part of the public domain.

• Validity of Conditions in Donations — A donor may impose any condition on a donation, including a mandatory donation of open space under P.D. No. 1216, provided the condition is not contrary to law, morals, good customs, public order, or public policy. A condition requiring construction on non-buildable open space is void and treated as if not imposed.

• In pari delicto (Article 1412, Civil Code) — When both contracting parties are at fault with respect to an unlawful cause, neither may recover what was given by virtue of the contract or demand performance of the other's undertaking. The courts will not aid either party to enforce an illegal contract but will leave them both where they find them. Applied here to bar both the donor from revoking the donation and the donee from invoking the void condition.

• Non-Alienability of Open Spaces in Residential Subdivisions — Open spaces reserved for parks, playgrounds, and recreational use under P.D. No. 1216 are non-alienable public lands and non-buildable. They are beyond the commerce of men and must remain perpetually part of the public domain, devoted to public use as parks, playgrounds, or recreation areas.

• Mandatory Nature of Donation Under P.D. No. 1216 — The amendment to Section 31 of P.D. No. 957 changed the donation of open spaces from optional to mandatory: the owner or developer "shall donate" the open space to the city or municipality, and it is "mandatory for the local governments to accept." The option to donate to the homeowners' association does not alter this mandatory character.

• Continuing Violation Subject to Injunction — The operation of an illegal structure constitutes a continuing violation of law and is a proper subject of injunction, even if the construction itself has been completed. A judgment in an action for injunction is not stayed after rendition and before or during appeal under Section 4 of Rule 39 of the Rules of Court.

• "We hold that any condition may be imposed in the donation, so long as the same is not contrary to law, morals, good customs, public order or public policy. The contention of petitioners that the donation should be unconditional because it is mandatory has no basis in law." — This passage articulates the ratio decidendi on the validity of conditions in mandatory donations of open space, rejecting the argument that statutory obligation to donate precludes the donor from imposing conditions.

• "There is therefore no legal basis whatsoever to revoke the donation of the subject open space and to return the donated land to private respondent. The donated land should remain with the donee as the law clearly intended such open spaces to be perpetually part of the public domain, non-alienable and permanently devoted to public use as such parks, playgrounds or recreation areas." — This passage states the Court's definitive ruling on the non-revocation of the donation, grounded in the public-domain character of open spaces and the in pari delicto doctrine.

• "But the end never justifies the means, and however laudable the purpose of the construction in question, this Court cannot and will not countenance an outright and continuing violation of the laws of the land, especially when committed by public officials." — This passage reflects the Court's policy stance that even commendable government projects cannot override statutory mandates, particularly when undertaken by public officials in bad faith.

• Palanca vs. City of Manila, 41 Phil. 125 (1920) — Cited for the principle that courts should not unlawfully expand the provisions of a decree beyond what it provides, in rejecting petitioners' contention that the donation must be unconditional.
• Republic Flour Mills, Inc. vs. Commissioner of Customs, 39 SCRA 268 (1971) — Cited alongside Palanca for the same proposition against judicial expansion of statutory provisions.
• Teja vs. Intermediate Appellate Court, 148 SCRA 347 (1987) — Cited for the doctrine that courts will not aid either party to enforce an illegal contract but will leave them both where they find them, applied to bar revocation of the donation.
• Aragones vs. Subido, 25 SCRA 95 (1968) — Cited for the proposition that there can be no injunction of events that have already transpired, which the Court distinguished by characterizing the operation of the center as a continuing violation.
• Dayrit vs. De Los Santos, 18 Phil. 275 (1911) — Cited for the principle that equity should grant injunctive relief where persistent repetition of a wrong is threatened.
• Vidad vs. RTC of Negros Oriental, Br. 42, 227 SCRA 271 (1993) — Cited for the doctrine that public officials are not immune from damages in their personal capacities arising from acts done in bad faith or beyond the scope of their authority.

• Section 31, Presidential Decree No. 957, as amended by Section 2, Presidential Decree No. 1216 — Mandates that subdivision owners or developers reserve 30% of the gross area for open space, with 3.5%–9% allocated exclusively for parks, playgrounds, and recreational use depending on density category. Declares such areas as non-alienable public lands and non-buildable. Requires donation of roads, alleys, sidewalks, and playgrounds to the city or municipality upon completion, with mandatory acceptance by the local government.
• Article 727, Civil Code — Provides that donations are generally valid and may be subject to conditions, so long as the conditions are not illegal or impossible. Applied to uphold the donor's right to impose conditions on the donation of open space.
• Article 1412, Civil Code — Provides that when the fault is on the part of both contracting parties to an unlawful cause, neither may recover what was given by virtue of the contract or demand performance of the other's undertaking. Applied to bar both parties from seeking revocation or enforcement of the void conditions.
• Article 764, Civil Code — Governs revocation of donations for non-compliance with conditions. Cited by private respondent as basis for revocation, but the Court declined to apply it because the breached condition was void.
• Section 4, Rule 39, Rules of Court — Provides that a judgment in an action for injunction shall not be stayed after its rendition and before an appeal is taken or during the pendency of an appeal. Applied to hold that the trial court's cease-and-desist order remained in full force and effect.
• Section 10, Municipal Ordinance No. 1, Series of 1962 (Subdivision Ordinance of the Municipality of Angeles) — Requires subdivisions of at least one hectare to set aside at least 5% of the gross area as open spaces for parks, playgrounds, and playlots. The trial court found no inconsistency between this ordinance and the deed's conditions.

Narvasa, C.J., Davide, Jr., Melo, and Francisco, JJ., concurred.