Roman Catholic Archbishop of Manila, et al. vs. Court of Appeals, et al.

A stipulation in a deed of donation providing for its automatic revocation and reversion of the property upon breach of a condition is valid, and a judicial action to enforce such reversion is subject to the ten-year prescriptive period for written contracts under Article 1144 of the Civil Code, not the four-year period under Article 764. However, a condition in a donation that prohibits the alienation of the property for an unreasonable period, such as one hundred (100) years, is void as an undue restriction on ownership and contrary to public policy, and shall be considered as not imposed.

On August 23, 1930, the Spouses Eusebio de Castro and Martina Rieta executed a deed of donation of a parcel of land in Kawit, Cavite, in favor of the Roman Catholic Archbishop of Manila. The deed contained a condition that the donee shall not sell or dispose of the property within 100 years; violation would render the donation ipso facto null and void, with the property reverting to the donors' estate. On June 30, 1980, the Roman Catholic Bishop of Imus, to whom administration of the property was allegedly transferred, sold the property to the Spouses Florencio and Soledad Ignao. In 1984, the Estate of the donors filed a complaint seeking nullification of the donation, rescission of the sale, and reconveyance of the property.

• Nature of the Action: Private respondents, representing the estate of the donors, filed a complaint for nullification of a deed of donation, rescission of a deed of absolute sale, and reconveyance of a parcel of land with damages.
• The Donation and Its Condition: On August 23, 1930, the Spouses Eusebio de Castro and Martina Rieta donated a 964-square-meter parcel of land in Kawit, Cavite, to the Roman Catholic Archbishop of Manila. The deed stipulated that the donee shall not sell or dispose of the property within 100 years; violation would render the donation ipso facto null and void, with the property reverting to the donors' estate.
• The Subsequent Sale: On June 30, 1980, the Roman Catholic Bishop of Imus (to whom administration of properties in Cavite was allegedly transferred) sold the donated property to the Spouses Florencio and Soledad Ignao for P114,000.00. A new title was issued in the spouses' name.
• The Complaint: Private respondents alleged the sale violated the 100-year prohibition, triggering automatic revocation and reversion.
• Lower Court Disposition: The RTC dismissed the complaint on prescription. The Court of Appeals reversed, finding the action timely.

• Prescription: Petitioners argued that the action for revocation of the donation had prescribed under Article 764 of the Civil Code, which provides a four-year prescriptive period from non-compliance with the condition. Since the sale occurred in 1980 and the complaint was filed in 1984, the four-year period had lapsed.
• Lack of Cause of Action (Implied): Through their motions to dismiss, petitioners also contended that private respondents had no legal capacity to sue and that the complaint stated no cause of action.

• Automatic Revocation Clause: Respondents countered that the deed of donation itself provided for ipso facto nullity upon violation, meaning no judicial action for revocation was necessary. Therefore, the four-year period under Article 764 did not apply. The proper prescriptive period was ten years for actions upon a written contract (Article 1144).
• Timeliness: Since the sale was in 1980 and the suit was filed in 1984, the action was well within the ten-year period.

• Prescription: Whether the cause of action for nullification of the donation and reconveyance of the property had prescribed.
• Validity of Condition: Whether the 100-year prohibition on alienation in the deed of donation is a valid and enforceable condition.

• Prescription: The action had not prescribed. The Court agreed with the Court of Appeals that the ipso facto revocation clause in the deed of donation meant the contract was automatically rescinded upon breach, without need for a prior judicial declaration. Consequently, the four-year period under Article 764 (which applies when judicial revocation is sought) was inapplicable. The applicable period was the ten-year prescriptive period for actions upon a written contract under Article 1144 of the Civil Code. Since the sale occurred in 1980 and the complaint was filed in 1984, the action was timely.
• Validity of Condition: The 100-year prohibition on alienation is void. The condition constitutes an unreasonable and undue restriction on the right of ownership, specifically the right to dispose (jus disponendi), which is an indispensable attribute of ownership. Such a prohibition, to be valid, must not be perpetual or for an unreasonable period. By analogy to Articles 494 (prohibition of partition not exceeding 20 years) and 870 (testamentary dispositions declaring property inalienable for more than 20 years are void) of the Civil Code, a century-long prohibition is patently unreasonable. The condition is therefore considered an illegal or impossible condition under Article 727 and shall be considered as not imposed. Without this invalid condition, the sale did not violate the donation, and private respondents had no cause of action.

• Automatic Revocation of Contract (Ipso Facto Clause): Where a contract, including a donation, expressly provides for its automatic rescission or revocation upon the occurrence of a specific contingency (e.g., breach of condition), judicial intervention is not necessary to effect the rescission. The contract is deemed rescinded by virtue of the agreement itself. A subsequent judicial action is merely to determine the propriety of the rescission and to declare it, not to accomplish the rescissory act.
• Unreasonable Restraint on Alienation as Void Condition: A condition in a donation (or other transfer) that prohibits the alienation of property for an unreasonable length of time is void as contrary to public policy and as an undue restriction on the essential attributes of ownership. What constitutes an "unreasonable period" is to be determined by analogy to statutory limits on similar restrictions (e.g., 20-year limits on prohibitions of partition or testamentary inalienability). Such a void condition is considered as not imposed under Article 727 of the Civil Code.

• "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..." (Quoting the Court of Appeals with approval on the effect of an automatic revocation clause).
• "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."
• "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."

• De Luna, et al. vs. Abrigo, et al., 181 SCRA 150 (1990) — Cited as controlling authority upholding the validity of a stipulation in a donation providing for automatic reversion upon breach of condition, characterizing it as an agreement granting a right to rescind unilaterally without need for court action.
• Lopez vs. Commissioner of Customs, et al., 37 SCRA 327 (1971); Froilan vs. Pan Oriental Shipping Co., et al., 12 SCRA 276 (1964); De la Rama Steamship Co., Inc. vs. Tan, etc., et al., 99 Phil. 1034 (1956) — Cited by the Court of Appeals for the general rule that judicial action for rescission is unnecessary where the contract itself provides for cancellation for violation of its terms.
• University of the Philippines vs. Angeles, etc., et al., 35 SCRA 102 (1970) — Cited for the rationale that judicial intervention in cases of automatic rescission is to determine the propriety of the rescission, not to effect it.

• Article 764, Civil Code — Provides for the revocation of a donation at the instance of the donor for non-compliance with conditions and a four-year prescriptive period. Held inapplicable where the donation provides for automatic revocation.
• Article 1144(1), Civil Code — Establishes a ten-year prescriptive period for actions upon a written contract. Held applicable to an action to enforce reversion under an automatic revocation clause in a donation.
• Article 727, Civil Code — Provides that impossible conditions and those contrary to law or good customs shall be considered as not imposed. Applied to void the 100-year prohibition on alienation.
• Article 732, Civil Code — States that donations inter vivos are governed by the general provisions on contracts and obligations in all matters not determined by the title on donations. Used to justify applying contract law principles (on automatic rescission) to the donation.
• Article 1306, Civil Code — Establishes the autonomy of contracting parties to stipulate terms and conditions not contrary to law, morals, good customs, public order, or public policy. Referenced in upholding the automatic revocation clause.
• Article 494, Civil Code (3rd paragraph) — By analogy, cited to show that a donor or testator may prohibit partition for a period not exceeding twenty (20) years.
• Article 870, Civil Code — By analogy, cited to show that testamentary dispositions declaring property inalienable for more than twenty (20) years are void.

• Justice Ameurfina Melencio-Herrera (concurring)
• Justice Abdulwahid A. Bidin (concurring, as per the list in the decision text)
• Justice Isagani A. Cruz (concurring, as per the list in the decision text)
• Justice Florenz D. Regalado (Ponente, concurring)