G.R. No. 232675 - Municipality of Dasmarinas vs. Campos

Case Summary (G.R. No. 232675)

Factual Background

Dr. Paulo C. Campos was the registered owner of parcels of land in Dasmarinas, Cavite, covered by several Transfer Certificates of Title. On July 28, 1976, he executed a Deed of Donation in favor of the NHA conveying in donation parcels totaling 12,798 square meters on condition that the NHA construct a 36-meter-wide access road from Highway 17 to the Dasmarinas Resettlement Project. The deed expressly stipulated that should the donee fail to use the area for the 36-meter road or delay development, the donor reserved the right to use the property until the donee could use it. The NHA constructed instead a 20-meter-wide access road, claiming reservation of the remaining 16 meters for future widening and citing traffic volume as justification. Without notice to Dr. Campos, the NHA executed a second Deed of Donation and Acceptance on June 13, 1993, transferring the roadworks to the Municipality of Dasmarinas and invoking Section 31 of P.D. No. 957 as authority.

Trial Court Proceedings

On November 13, 2001, Dr. Campos filed an action for Revocation of Donation alleging breach of the condition to construct the 36-meter road and improper subsequent donation of the property to the Municipality of Dasmarinas. The complaint was answered by both petitioners. The case was re-raffled; Dr. Campos died during litigation and his heirs were substituted. On March 16, 2011, RTC, Branch 22, issued a Decision partially granting revocation: it declared the 1976 Deed of Donation partially revoked to the extent of the area not included in the 20-meter road, declared the 1993 Deed of Donation and Acceptance without legal effect to that same extent, adjudged reconveyance of the unused portion to Dr. Campos’ heirs, and ordered turnover of possession. Claims for moral damages and attorney’s fees were denied. The NHA’s motion for reconsideration was denied on August 12, 2011.

Court of Appeals Decision

The NHA and the Municipality of Dasmarinas appealed to the CA. On November 10, 2016, the CA affirmed the RTC Decision. The CA agreed that the 1976 donation was onerous, governed by the law on contracts and subject to the ten-year prescriptive period under Article 1144. The CA held that the respondents’ right of action accrued upon the NHA’s 1993 donation to the Municipality of Dasmarinas, and that the action filed in 2001 was timely. The CA also found that the NHA failed to fulfill the obligation to build a 36-meter road, that the 20-meter construction over more than 25 years constituted a substantial breach, and that invocation of P.D. No. 957, Sec. 31 was unjustified because the Dasmarinas Resettlement Project was not shown to be a subdivision or condominium project. The CA denied the petitioners’ appeal. Motions for reconsideration were denied by CA Resolution dated July 3, 2017.

Issues Presented

The consolidated petitions to the Supreme Court raised two principal issues. First, whether the action to revoke the Deed of Donation had prescribed or was barred by laches. Second, whether the CA erred in affirming the RTC’s factual finding of breach by the NHA and in authorizing partial revocation and reconveyance of the unused 16-meter portion, and whether the petitioners established any legal infirmity warranting reversal.

Petitioners’ Contentions

The petitioners contended that the cause of action accrued when Dr. Campos discovered the NHA had built only a 20-meter road, and thus the action filed in 2001 had long prescribed under Article 1144. They alternatively invoked laches, alleging that Dr. Campos slept on his rights for a quarter century. On the merits, petitioners argued substantial compliance: actual construction of a 20-meter road with the 16-meter portion reserved for future widening meant the condition was effectively met; any delay was contemplated by the 1976 deed which permitted the donor to reserve use of the property until the donee could use it. Petitioners also relied on P.D. No. 957, Sec. 31 to justify the 1993 donation as mandatory upon completion of subdivision or condominium projects.

Respondents’ Contentions

The respondents-heirs maintained that the donation was onerous and governed by contract law; accordingly the ten-year prescriptive period under Article 1144 ran from the 1993 transfer to the Municipality of Dasmarinas, rendering the 2001 complaint timely. They insisted the NHA materially breached the 1976 deed by building only a 20-meter road and by subsequently donating the property, which eliminated any realistic possibility for the NHA to complete the 36-meter road or for the donor to exercise the reserved right. The respondents also argued that the post-1976 transfer omitted the protective reservation clause and thus rendered the original condition impossible to fulfill, justifying revocation and reconveyance.

The Supreme Court’s Disposition

The Court denied the consolidated petitions for lack of merit and affirmed the CA and RTC rulings. The Court held that the 1976 deed was an onerous donation governed by contract law; under Article 1144 the ten-year prescriptive period for actions upon a written contract applies and the respondents’ right of action accrued upon the NHA’s 1993 donation to the Municipality of Dasmarinas. The Court found the 2001 filing within that ten-year period and therefore not prescribed. The Court also ruled that laches did not bar the action because the delay was within the prescriptive period, the donor had permitted the NHA time to perform, and the equitable prerequisites for laches were not satisfied.

Legal Basis and Reasoning on Merits

The Court treated the factual findings of the RTC and CA as binding absent a showing that those tribunals overlooked or misconstrued material facts. The Court agreed that the dispositive object of the 1976 agreement was the construction of a 36-meter-wide access road, repeatedly stipulated in the deed. The Court found a substantial breach when the NHA constructed only a 20-meter road and left 16 meters unused for the stated purpose over a prolonged period. The Court rejected the NHA’s assertion of compliance by reservation of the remaining 16 meters because the deed’s language required actual use for the 36-meter road and because the NHA’s subsequent donation to the Municipality of Dasmarinas removed any practical capacity to complete the condition. The Court further determined that P.D. No. 957, Sec. 31 did not justify the 1993 transfer because the petitioners failed to prove that the Dasmarinas Resettlement Project constituted a subdivision or condominium project as defined in that decree. Thus the second donation could not be excused as mandatory under that statute.

Doctrine on Prescription, Laches, and Substantial Breach

The Court reaffirmed that onerous donations are governed by contract law and that prescription under Article 1144 begins to run when the right to litigate becomes enforceable, which in this case was when the NHA transferred the property to the Municipality of Dasmarinas. The Court reiterated that laches is an equitable defense requiring established elements of unjustified delay and resulting prejudice, and that delay within the pre

Case Syllabus (G.R. No. 232675)

Parties and Posture

Municipality of Dasmarinas and National Housing Authority filed consolidated Petitions for Review on Certiorari under Rule 45, Rules of Court from the Court of Appeals decision affirming the Regional Trial Court decision.
Dr. Paulo C. Campos, substituted by his children Jose Paulo Campos, Paulo Campos, Jr., and Enrique Campos, was the original donor and respondent in the revocation action now defended by his heirs.
The petitions sought reversal of the CA Decision dated November 10, 2016 and CA Resolution dated July 3, 2017, which affirmed the RTC Decision dated March 16, 2011 partially revoking the original donation.
The consolidated petitions raised principally procedural questions of prescription and laches, and substantive questions on whether the donee violated the terms of the donation thereby justifying revocation and reconveyance.

Key Facts

Dr. Paulo C. Campos owned parcelized lands covered by Transfer Certificate of Title Nos. T-69124, T-69125, T-76195, and T-17736.
On July 28, 1976, Dr. Campos executed a Deed of Donation conveying 12,798 square meters to the NHA conditioned upon construction of a thirty-six meter wide access road from Highway 17 to Dasmarinas Resettlement Project.
The original Deed of Donation expressly provided that should the NHA fail to use the area or delay development the donor reserved the right to use it until the donee was in a position to use the property.
The NHA constructed only a twenty meter wide access road and claimed it had “reserved” the remaining sixteen meters for future widening and that traffic volumes then justified partial construction.
On June 13, 1993, the NHA executed a Deed of Donation and Acceptance in favor of the Municipality of Dasmarinas conveying roads in the Dasmarinas Bagong Bayan Resettlement Project allegedly pursuant to Section 31, P.D. No. 957.
The second deed covered a larger aggregate road area and contained conditions regarding exclusive public use and maintenance but did not reproduce the reservation allowing the donor to use the area during delay.
Dr. Campos filed suit for Revocation of Donation on November 13, 2001; he died in 2007 and his heirs were substituted.
The RTC partially granted revocation on March 16, 2011 and ordered reconveyance of the area not included in the 20-meter road to the heirs.
The CA affirmed the RTC on November 10, 2016 and denied motions for reconsideration on July 3, 2017, prompting the present consolidated petitions.
While the petitions were pending, the Municipality of Dasmarinas commenced road widening and construction affecting the portion adjudged for reconveyance.

Procedural History

The action for Revocation of Donation was filed in RTC, Dasmarinas, Branch 90 on November 13, 2001 and subsequently re-raffled to RTC, Branch 22.
The RTC rendered judgment partially revoking the 1976 Deed and ordering reconveyance on March 16, 2011, and denied the NHA’s motion for reconsideration on August 12, 2011.
Both petitioners appealed to the Court of Appeals which rendered a Decision affirming the RTC on November 10, 2016, and denied motions for reconsideration on July 3, 2017.
The petitioners filed separate but consolidated Petitions for Review on Certiorari under Rule 45 before the Supreme Court challenging the CA rulings.

Issues

Whether the action for revocation of the Deed of Donation had prescribed under Art. 1144, Civil Code or was barred by laches.
Whether the NHA committed such breach of the original Deed of Donation as to justify partial revocation and reconveyance of the unused sixteen meter portion.
Whether the subsequent donation to the Municipality of Dasmarinas was justified by Section 31, P.D. No. 957.
Whether the factual and legal findings of the RTC and CA contained errors warranting reversal by the Supreme Court.

Contentions of Parties

The petitioners contended that prescription began when Dr. Campos discovered that only a 20-meter road had been constructed and thus the action filed in 2001 was un