Title
Province of Camarines Sur vs. Bodega Glassware
Case
G.R. No. 194199
Decision Date
Mar 22, 2017
A land donation to CASTEA was revoked due to lease violations; the Supreme Court upheld the revocation, ruled Bodega's possession unlawful, and ordered eviction with compensation.
donation of land
breach of condition
ejectment

Case Summary (G.R. No. 174379)

Factual Background

The petitioner owned a parcel of land in Penafrancia, Naga City under OCT No. 22. On September 28, 1966, then Provincial Governor Apolonio G. Maleniza donated approximately 600 square meters of that parcel to the Camarines Sur Teachers' Association, Inc. (CASTEA) by a Deed of Donation inter vivos that contained a clear automatic revocation clause conditioning the donation on specified uses, prohibiting sale or encumbrance, and requiring construction to commence within one year. CASTEA accepted the donation and, according to the record, complied with the conditions. On August 15, 1995 CASTEA executed a Contract of Lease with respondent Bodega Glassware, and Bodega took actual possession on September 1, 1995 under a twenty-year lease. In July 2005 the Provincial Legal Officer inquired of Bodega its legal basis for possession; Bodega produced no proof. Petitioner tolerated Bodega's occupancy for several years but later demanded surrender of possession by letter dated October 4, 2007, delivered November 11, 2007. Petitioner executed a Deed of Revocation dated October 14, 2007, invoking the automatic revocation clause on the ground that CASTEA breached the donation by leasing the property; the record shows CASTEA never contested the revocation. Petitioner then instituted an unlawful detainer action against Bodega on March 13, 2008.

Proceedings Below

The Municipal Trial Court of Naga City, Branch 2, in a Decision dated December 11, 2008, found for petitioner and ordered Bodega to vacate and to pay PHP 15,000 per month as reasonable compensation. Bodega appealed to the Regional Trial Court of Naga City, Branch 26, which, in a Decision dated May 13, 2009, reversed and dismissed the case for failure of plaintiff to present evidence. Petitioner appealed to the Court of Appeals, which rendered the assailed Decision dated May 31, 2010 affirming the RTC and denying the appeal; the CA also denied reconsideration in a Resolution dated October 12, 2010. Petitioner then filed the present verified petition for review on certiorari under Rule 45.

The Parties' Contentions

Petitioner asserted that the CA misapplied this Court's doctrine on automatic revocation, particularly as articulated in Roman Catholic Archbishop of Manila v. Court of Appeals, and that the automatic revocation clause in the Deed of Donation operated immediately upon CASTEA's breach so that judicial action for reconveyance was unnecessary where the donee did not contest the revocation. Petitioner maintained that it validly considered the donation revoked, reclaimed ownership and possession, and filed the unlawful detainer within the applicable prescriptive period. Respondent Bodega Glassware grounded its right to possession on the Contract of Lease with CASTEA and contended that the donation was not revoked absent a judicial declaration; Bodega also adopted the CA's prescription argument that petitioner should have filed an action for reconveyance and that the action was time-barred.

Issues Presented

The primary issue was which party was entitled to actual physical possession of the subject property. Resolution required determination of the legal effect of the automatic revocation clause in the Deed of Donation and the applicable prescriptive period for the remedies invoked. The Court limited its inquiry to the possession question as proper in an unlawful detainer proceeding and treated any ownership determination as provisional for that purpose.

Legal Framework Applicable to Ejectment

The Supreme Court reiterated the summary nature of ejectment proceedings under Rule 70, Rules of Court, which address only the issue of actual possession. The elements of unlawful detainer include initial lawful possession by contract or tolerance, termination by notice, continued possession by the defendant despite demand, and institution of action within one year from last demand. The Court surveyed the doctrine on automatic revocation and automatic rescission, noting that under Art. 1306 parties may stipulate conditions and that where a donation contains a valid automatic revocation clause, breach of the condition effects revocation without prior judicial declaration. The Court distinguished actions for judicial revocation governed by Art. 764 from cases where the parties themselves provided for automatic revocation; it also invoked Art. 428 for the owner's right to recover possession and Rule 70, Sec. 17 for the award of reasonable compensation, attorney's fees and costs.

Supreme Court's Ruling

The Supreme Court partially granted the petition, reversed and set aside the decision of the Court of Appeals dated May 31, 2010 and the RTC decision it had affirmed, and reinstated the Decision of the MTC Naga City. The Court held that petitioner validly considered the donation revoked by operation of the automatic revocation clause upon CASTEA's breach and that CASTEA never contested the revocation. Consequently, the property reverted to the petitioner and petitioner, as owner, had the better right to possess vis-à-vis Bodega whose possession derived from an unauthorized lease. The Court further held that petitioner filed the unlawful detainer within the one-year period from last demand, and it affirmed the award of PHP 15,000 monthly as reasonable compensation for use and occupation.

Court's Legal Reasoning

The Court first emphasized that an ejectment suit resolves only possession de facto; any ownership determination is provisional. It then applied this Court's prior rulings on automatic revocation. Relying on De Luna v. Abrigo, the Court explained that where a donation is onerous or contains contractual stipulations an automatic revocation clause is valid because parties may agree to unilateral rescission under Art. 1306, and jurisprudence on automatic rescission in contracts applies. The Court cited University of the Philippines v. De los Angeles and Angeles v. Calasanz to the effect that a party may treat a contract as rescinded upon breach without awaiting judicial decree, subject to the other party's right to challenge the rescission in court. The Court reiterated the holding in Roman Catholic Archbishop of Manila v. Court of Appeals that judicial intervention is necessary only to determine whether the rescission or revocation was proper when the donee contests it; the judicial decision is declaratory of revocation but not the revocatory act itself. Applying these principles to the present Deed of Donation, the Court construed the clause as an automatic revocation clause covering its three enumerated conditions; CASTEA's lease breached those conditions and thus the donation automatically reverted to the donor. The CA erred in requiring petitioner to fil

...continue reading

Analyze Cases Smarter, Faster
Jur helps you analyze cases smarter to comprehend faster, building context before diving into full texts. AI-powered analysis, always verify critical details.

About Privacy Terms