Province of Camarines Sur vs. Bodega Glassware

A donation containing an automatic revocation clause is deemed immediately and automatically revoked upon the donee's breach of the imposed conditions, without need for a judicial declaration of revocation, unless the donee challenges the propriety of such revocation in court.

The Province of Camarines Sur owned a parcel of land. In 1966, it donated a portion to CASTEA via a Deed of Donation inter vivos. The deed contained specific conditions: (1) use the land only for constructing CASTEA's office building; (2) not sell, mortgage, or incumber the property; and (3) commence construction within one year. A final clause stated that failure to comply would cause the donation to be "automatically revoked and voided." CASTEA accepted and initially complied. However, in 1995, CASTEA leased the property to Bodega Glassware for 20 years.

• Filed in MTC Naga City (Unlawful Detainer).
• MTC ruled in favor of the Province, ordering Bodega to vacate and pay compensation.
• Bodega appealed to RTC Naga City, which reversed the MTC and dismissed the case.
• The Province appealed to the Court of Appeals (CA), which affirmed the RTC's dismissal.
• The Province elevated the case to the Supreme Court via a Petition for Review on Certiorari.

• Petitioner Province of Camarines Sur is the registered owner of the land (OCT No. 22).
• In 1966, it donated ~600 sqm to CASTEA via a Deed of Donation with an automatic revocation clause tied to specific use and non-alienation conditions.
• In 1995, CASTEA leased the property to respondent Bodega Glassware for 20 years.
• In 2005, the Province asked Bodega for proof of legal possession; Bodega failed to provide any.
• In 2007, the Province sent a formal demand to vacate, citing its tolerance of Bodega's possession. Bodega refused.
• The Province executed a Deed of Revocation of Donation in 2007, citing CASTEA's lease to Bodega as a breach of conditions. CASTEA did not contest this.
• In 2008, the Province filed an unlawful detainer case against Bodega.

• The automatic revocation clause in the Deed of Donation was valid. CASTEA's lease to Bodega breached the conditions, causing immediate and automatic revocation of the donation without need for judicial intervention.
• Upon revocation, ownership and right to possession reverted to the Province as donor.
• Bodega's possession, initially based on a contract with CASTEA, became unlawful after the donation was revoked and demand to vacate was made.
• The action for unlawful detainer was filed within one year from the last demand, so it had not prescribed.

• Its possession was based on a valid Contract of Lease with CASTEA, who was the owner of the property at the time.
• The automatic revocation clause did not immediately revoke the donation; a judicial declaration was required for the revocation to be effective.
• The Province's action had prescribed because it should have filed an action for reconveyance within 10 years from the alleged breach (the 1995 lease).

• Procedural Issues: N/A
• Substantive Issues:
  1. Whether the automatic revocation clause in the Deed of Donation validly and immediately revoked the donation upon CASTEA's breach without need for a judicial declaration.
  2. Whether the Province's action for unlawful detainer against Bodega had prescribed.
  3. Who has the better right of possession de facto over the property.

• Procedural: N/A
• Substantive:
  1. Yes. The SC ruled that the automatic revocation clause was valid. Citing De Luna v. Abrigo and Roman Catholic Archbishop of Manila v. CA, the SC held that such a clause operates to immediately and automatically revoke the donation upon the occurrence of the stipulated condition (breach). Judicial intervention is only necessary if the donee challenges the propriety of the revocation. Here, CASTEA did not contest it, so the revocation was effective upon the Province's execution of the Deed of Revocation.
  2. No. The SC clarified that Article 764 of the Civil Code (4-year period to file a judicial action for revocation) does not apply to donations with automatic revocation clauses. The relevant prescriptive period is that for unlawful detainer: the action must be filed within one year from the last demand to vacate. The Province's demand was in November 2007, and the complaint was filed in March 2008—well within the period.
  3. The Province. Upon automatic revocation, ownership reverted to the Province. As owner, it has the right to possess the property (Art. 428, Civil Code). Bodega's lease contract with CASTEA could not survive the revocation, as CASTEA's authority to lease ended. Thus, the Province has the better right of possession.

• Automatic Revocation Clause in Donations — A clause in a donation that provides for its automatic revocation upon the donee's breach of a condition is valid and enforceable. The donation is deemed revoked ipso facto upon the breach, without need for a prior judicial declaration. Judicial intervention becomes necessary only if the donee contests the revocation, and even then, the court's role is merely declaratory.
• Applied here: CASTEA's lease to Bodega breached the conditions (use only for its building; no incumbrance). The donation was automatically revoked, reverting ownership to the Province.
• Possession in Unlawful Detainer Cases — Ejectment cases (e.g., unlawful detainer) are summary proceedings that resolve only the issue of physical possession (possession de facto). Any determination of ownership is merely provisional and for the sole purpose of deciding who has the better right to possess.

• "[J]udicial 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." (Citing De Luna v. Abrigo)
• "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."

• De Luna v. Abrigo (1990) — Established the validity of automatic revocation clauses in onerous donations, applying contract law principles on automatic rescission. This case was the foundational precedent extended to all donations inter vivos.
• Roman Catholic Archbishop of Manila v. Court of Appeals (1991) — Extended the De Luna doctrine to donations inter vivos in general, confirming that automatic revocation is effective without judicial action and that Art. 764 (prescription for judicial revocation) does not apply.
• University of the Philippines v. De los Angeles (1970) — Cited for the principle that a party to a contract with an automatic rescission clause may consider it rescinded upon breach without a prior court suit, to avoid accumulating damages.
• Dolar v. Barangay Lublub (2005) and Zamboanga Barter Traders Kilusang Bayan, Inc. v. Plagata (2008) — Reiterated the doctrine on automatic revocation/reversion in donations.

• Civil Code, Art. 732 — Donations are governed by the general provisions on obligations and contracts in all matters not determined in the Title on Donations.
• Civil Code, Art. 1306 — Parties may establish stipulations, clauses, terms, and conditions they deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. (Basis for upholding the automatic revocation clause).
• Civil Code, Art. 428 — The owner has the right to enjoy and dispose of a thing, and to recover it from any possessor. (Basis for the donor's right to recover possession after revocation).
• Civil Code, Art. 1147 & Rules of Court, Rule 70, Sec. 1 — An action for unlawful detainer must be filed within one (1) year from the last demand to vacate.
• Rules of Court, Rule 70, Sec. 17 — Entitles the plaintiff in a successful ejectment case to restitution of the premises and reasonable compensation for its use and occupation.