Case Summary (G.R. No. 133705)
Petitioner
C-J Yulo & Sons, Inc., a family-owned corporation that donated a parcel of land for the establishment and support of a home for aged and infirm persons.
Respondent
Roman Catholic Bishop of San Pablo, Inc., a religious corporation that accepted the donation and assumed the burden to build, operate, and maintain the home.
Key Dates
• September 24, 1977 – Deed of donation executed and TCT No. T-82803 transferred to donee (re-issued as TCT No. T-91348)
• 1980–1985 – Lease to Martin Gomez without donor’s prior written consent
• 1986 – Lease to Jose Bostre; again without written consent
• Post-1986 – Lease to Rudy Caballes, also without consent
• June 21, 1990 – Bishop Bantigue’s letter seeking permission to exchange or sell the donated land
• September 20, 1990 – Donor’s board resolution revoking donation per Deed’s Section 5
• November 19, 1990 – Complaint for revocation filed in RTC, Calamba, Laguna
• December 22, 1995 – RTC decision, revoking donation
• December 19, 1997 – CA decision reversing RTC and upholding donation
• April 30, 1998 – CA resolution denying reconsideration
• March 31, 2005 – Supreme Court decision
Applicable Law
• 1987 Philippine Constitution (decision post-1990)
• New Civil Code of the Philippines:
– Art. 733 (governing onerous donations by contract law)
– Art. 764 (four-year prescription for revocation of simple donations)
– Art. 1144 (ten-year prescription for contractual actions)
– Art. 1191 (rescission for breach of reciprocal obligation requires substantial breach)
– Art. 727 (invalid or impossible conditions to be voided)
Factual Background
The donor conveyed a 41,117 sqm parcel to the donee “by way of donation,” imposing conditions: construction of an interfaith home for the aged and infirm; maintenance of a 15-m green belt; agricultural use of surplus land; annual masses for the Yulo family; absolute prohibition on sale or disposal without written consent, under threat of automatic reversion to another charitable organization. The donee planted sugar cane and later leased portions for ranching and cattle fattening, each time without obtaining the donor’s prior written consent.
Procedural History
The donor sent a revocation notice (Sept. 20, 1990). The donee refused to reconvey title. The donor filed suit for revocation and reconveyance. The RTC (Dec. 22, 1995) declared the donation revoked and ordered reconveyance. The CA (Dec. 19, 1997) reversed, upholding the donation; its denial of reconsideration was dated April 30, 1998. The donor elevated the matter to the Supreme Court via petition for review on certiorari.
Issue
Whether the donor validly revoked the onerous donation on grounds that the donee breached the Deed’s condition requiring prior written consent for leases, and whether such breaches warrant rescission under the law.
Supreme Court’s Decision
The petition is denied; the CA decision is affirmed.
Reasoning
Onerous Donation and Governing Law
– The Deed imposed a reciprocal obligation on donee to establish and maintain a home. Under Art. 733, onerous donations are governed by contract law, not by the general donation rules.Prescription
– RTC and CA correctly held that the ten-year prescription under Art. 1144 applies to actions on contractual obligations, not the four-year period for simple donations (Art. 764). The suit filed in 1990 was timely.Casual vs. Substantial Breach (Art. 1191)
– Contract rescission requires a substantial breach defeating the contract’s object. The sporadic, unauthorized leases did not prevent or frustrate the establishment and operation of the home. They were incidental measures to generate funds and protect premises, consistent with the donation’s purpose.Precedent on Permitted Acts and Purpose
– Republic v. Silim (2001) held that exchanging donated land for a larger parcel—facilitating the same charitable purpose—did not breach an exclusive-use condition. Here, the leases furthered the home’s objectives and were expressly con
Case Syllabus (G.R. No. 133705)
Facts
- On September 24, 1977, C-J Yulo & Sons, Inc. (Donor) executed a deed of donation in favor of Roman Catholic Bishop of San Pablo, Inc. (Donee), conveying a 41,117-sqm parcel in Canlubang, Calamba, Laguna (TCT No. T-82803 → TCT No. T-91348).
- The deed recited charitable purposes: establishment and maintenance of a home for the aged and infirm, agricultural support, greenbelt, and annual masses for the Yulo family.
- The donation was subject to conditions: use of land for the home, a 15-m greenbelt, crop-raising for sustenance, possible commercial leasing with donor’s written consent, and reversion upon breach.
Deed of Donation: Conditions and Covenants
- Use balance of land for resident-assisted agriculture; if urbanization rendered farming impractical, leasing for socially acceptable commercial use with written donor consent.
- Establish and maintain a 15-m greenbelt along the projected highway.
- Devote necessary land exclusively to the home for the aged and infirm, admitting residents regardless of creed and retired priests; others subject to a fee.
- Donee covenanted to celebrate annual masses for the Yulo family.
- Any sale, disposal, or unauthorized use (without prior written consent) triggers trust reversion to Donor.
Post-Donation Transactions
- Circa 1980, Donee leased a portion to Martin Gomez (sugar cane) without written consent; lease ended 1985.
- In 1986, Donee leased another portion to Jose Bostre (ranch use) to fund fence and nucleus building “Casa de la Merced,” again without written consent.
- Subsequently, Donee leased a third portion to Rudy Caballes (cattle fattening) for the same fundraising purpose, also lacking written consent.
Revocation by Donor
- On September 20, 1990, by board resolution, Donor’s president Miguel A. Yulo notified Donee of revocation under Section 5 of the deed, citing material breach (unauthorized leases) and demanded turnover of TCT No. T-91348.
- Do