G.R. No. 57455 - De Luna vs. Abrigo

Case Summary (G.R. No. 57455)

Factual Background

Prudencio de Luna donated a portion of Lot No. 3707 on January 24, 1965 to Luzonian Colleges, Inc., now Luzonian University Foundation, Inc., under terms and conditions that provided for automatic reversion of the property upon violation or non‑compliance. The foundation did not comply with the conditions. On April 9, 1971 Prudencio executed a Revival of Donation Intervivos in favor of the foundation that again imposed conditions, including the construction at the donee’s expense of a chapel, a nursery and a kindergarten to be named after St. Veronica according to specified plans, with construction to be at least seventy per cent completed within three years and the entire project completed within five years, and a clause providing for automatic reversion upon violation. The foundation accepted the revival and the donation was annotated in the memorandum of encumbrances of the title on April 15, 1971. A Deed of Segregation dated August 3, 1971 adjudicated the donated area as Lot No. 3707‑B and resulted in Transfer Certificate of Title No. T‑16152 in the foundation’s name.

Trial Court Proceedings

After the donor’s death, petitioners filed a complaint on September 23, 1980 seeking cancellation of the donation and reversion of the land to the heirs on the ground of non‑compliance with the conditions. The foundation answered, asserted partial and substantial compliance, alleged the donor granted an indefinite extension, and pleaded prescription as an affirmative defense. During pretrial the foundation moved for preliminary hearing on prescription. The trial court, relying on Parks v. Province of Tarlac, concluded that revocation of the donation was effective only upon judicial decree or upon the donee’s consent given subsequent to the effectivity of the donation or to violation of its conditions, and that the four‑year prescriptive period under Article 764 ran from April 9, 1976 to April 9, 1980. Because the complaint was filed on September 23, 1980, the trial court ordered the complaint dismissed in an Order dated July 7, 1981.

Issues Presented on Review

Petitioners assigned as errors the trial court’s rulings that the donee’s consent to revocation must be subsequent to the effectivity of the donation or subsequent to violation; that the complaint was a proceeding for judicial revocation under Article 764 and therefore barred by the four‑year prescription; and that the court erred in not rendering judgment on the pleadings.

Petitioners’ Contentions

Petitioners contended that the stipulation providing for automatic reversion in the deed of donation amounted to the parties’ agreement that no judicial action was necessary to effect revocation and that the action filed was not one for judicial revocation under Article 764 but an action to enforce a written contract subject to the ten‑year prescriptive period of Article 1144(1). Petitioners also argued that a judgment on the pleadings was improper because the defendant had contested material allegations and no motion for judgment on the pleadings was filed.

Respondent/Foundation’s Contentions

The foundation maintained that it had partially and substantially complied with the conditions of the donation and asserted that the donor had granted an indefinite extension to complete the improvements. The foundation pleaded prescription as an affirmative defense and relied on the trial court’s application of Article 764 and the precedent in Parks v. Province of Tarlac to support dismissal.

Legal Basis and Reasoning of the Supreme Court

The Court first characterized the donation as one with an onerous cause because it was subject to burdens requiring construction of specified improvements. The Court applied Article 733 of the New Civil Code, which provides that donations with an onerous cause are governed by the rules on contracts, and concluded that the law on donations — and specifically Article 764 — did not govern this donation. The Court explained that where a contract validly provides for automatic reversion or facultative resolutory conditions, the stipulation is enforceable under Article 1306 so long as it is not contrary to law, morals, good customs, public order or public policy, and that such stipulations effect extrajudicial rescission upon the happening of the condition without necessity of judicial decree. The Court cited precedents, including University of the Philippines v. de los Angeles, L‑28602, September 29, 1970, 35 SCRA 102‑107, and Angeles v. Calasanz, L‑42283, March 18, 1985, for the proposition that parties may contractually provide that violation of terms causes cancellation without court intervention. The Court, however, emphasized that judicial determination remains necessary where the alleged extrajudicial rescission is contested, because only final judicial adjudication can conclusively resolve whether the resolution was proper.

Application of Prescription Rules and Authorities

Applying the foregoing principles, the Court held that the complaint was an action to enforce a written contract governed by the general rules on prescription rather than an action to revoke a donation under Article 764. The Court therefore applied the ten‑year prescriptive period under Article 1144(1), counting from April 9, 1976, and found the complaint filed September 23, 1980 to be within that period. The Court held that the trial court erred in relying on Parks v. Province of Tarlac, because in Parks there was no stipulation for automatic reversion in the donation and thus judicial decree was required.

On Judgment on the Pleadings

The Court found that a judgment on the pleadings was not

Case Syllabus (G.R. No. 57455)

Parties and Procedural Posture

EVELYN DE LUNA, ROSALINA DE LUNA, PRUDENCIO DE LUNA, JR., WILLARD DE LUNA, ANTONIO DE LUNA AND JOSELITO DE LUNA, PETITIONERS are the children and heirs of the late Prudencio de Luna and filed the complaint on September 23, 1980 seeking cancellation of a donation and reversion of the donated land.
HON. SOFRONIO F. ABRIGO, PRESIDING JUDGE OF THE COURT OF FIRST INSTANCE OF QUEZON, BRANCH IX, AND LUZONIAN UNIVERSITY FOUNDATION, INC., RESPONDENTS include the trial judge who dismissed the complaint and the donee-institution that accepted the donation.
The trial court issued the assailed Order dated July 7, 1981 dismissing Civil Case No. 8624 on the ground of prescription.
Petitioners filed a petition for review on certiorari on July 22, 1981, which the Supreme Court gave due course on August 3, 1981 and resolved to consider submitted for decision on January 27, 1982.
The Supreme Court issued the present decision granting the petition and ordering reinstatement and trial on the merits.

Key Factual Allegations

Prudencio de Luna donated on January 24, 1965 a portion of 7,500 square meters of Lot No. 3707 by a Deed of Donation Intervivos subject to conditions and automatic reversion clauses.
A Revival of Donation Inter-vivos was executed on April 9, 1971 restating onerous conditions that included construction of a chapel, a nursery and a kindergarten to be at least seventy per cent finished within three years and fully completed within five years.
Paragraph eleven of the April 9, 1971 document provided for automatic reversion of the donated area to the donor and his heirs upon violation of any condition without need of further document.
The foundation accepted the donation and the donation was annotated in the memorandum of encumbrances on April 15, 1971 as Entry No. 17939 of Transfer Certificate of Title No. T-5775.
A Deed of Segregation dated August 3, 1971 adjudicated the donated area as Lot No. 3707-B and Transfer Certificate of Title No. T-16152 was issued in the foundation’s name.
The foundation asserted partial and substantial compliance and claimed an indefinite extension to complete the constructions, while petitioners alleged non-compliance and sought cancellation and reversion.
The trial court found that a judicial decree was necessary to revoke the donation and applied Article 764 of the New Civil Code to dismiss the complaint as prescribed.

Issues Presented

Whether the donee’s consent to revocation must be given subsequent to the effectivity of the donation or subsequent to non-compliance in order to avoid judicial revocation.
Whether the action filed is one for revocation under Article 764 of the New Civil Code with a four-year prescriptive period or an action to enforce a written contract subject to the ten-year prescriptive period of Article 1144(1).
Whether judgment on the pleadings was proper in the absence of a motion for judgment on the pleadings.

Contentions of Parties

Petitioners contended that the donation contained an agreed stipulation for automatic reversion and that the action is one to enforce a written contract prescribing in ten year