Title
Roman Catholic Archbishop vs. Court of Appeals
Case
G.R. No. 77425
Decision Date
Jun 19, 1991
A 1930 deed of donation with a 100-year sale prohibition was violated in 1980. The Supreme Court ruled the condition invalid, dismissing the reconveyance claim as the respondents lacked cause of action.
deed of donation
condition
sale of property
A

Case Summary (G.R. No. 77425)

Procedural history through the trial court and Court of Appeals

  • Private respondents (the donors’ heirs) filed suit on November 29, 1984 in the RTC, Imus: complaint for nullification of deed of donation, rescission of contract, reconveyance of property, and damages (Civil Case No. 095-84).
  • Petitioners filed motions to dismiss raising lack of legal capacity to sue, failure to state a cause of action, and prescription. The trial court dismissed the complaint on January 31, 1985 on the ground that the action had prescribed.
  • The Court of Appeals reversed on December 23, 1986, holding the action had not prescribed and ordering reinstatement and remand. Motions for reconsideration in CA were denied (Feb. 6, 1987). Petitioners then sought review by certiorari to the Supreme Court.

Issues presented and parties’ principal contentions

  • The principal legal issues were (1) whether the heirs’ action to revoke or otherwise nullify the donation and to reconvey the property was barred by prescription; and (2) whether dismissal of the action for rescission on the ground of prescription necessarily required dismissal of the reconveyance claim. Petitioners relied on Article 764 (four-year prescription for revocation of donation for noncompliance) and argued that the cause of action had prescribed; respondents and the CA took the position that the clause in the deed effecting automatic reversion meant that the action was governed by conventional contract prescription rules (ten years under Article 1144(1) for written contracts).

Supreme Court’s analysis on prescription and applicability of automatic revocation clause

  • The Court recognized that Article 764 prescribes a four-year action for revocation of donations for breach of condition, but concluded Article 764 was inapplicable because the donation instrument contained an express stipulation that breach of the condition would render the donation ipso facto null and void without need for judicial declaration.
  • Where a contract (or donation subject to contract rules) contains an enforceable stipulation providing for automatic revocation upon breach, judicial action to obtain rescission is not strictly necessary; courts intervene to determine whether the asserted rescission actually occurred properly. Because the deed provided for automatic reversion, the dispute was properly treated under the general law of contracts and obligations (Article 732), and the applicable prescriptive period for an action to enforce written contracts (ten years under Article 1144(1)) applied. On that basis the CA was correct to hold the action was not prescribed.

Reliance on precedent and doctrinal justification for treating the donation as contractual in effect

  • The Court sustained the CA’s use of prior authorities holding that parties may validly agree that a contract will be cancelled automatically upon breach of a stipulated condition, and that judicial rescission is unnecessary where the contract itself grants unilateral rescissory power upon the occurrence of a resolutory condition. The decision referenced De Luna v. Abrigo and other precedents to justify treating an express automatic reversion clause as invoking the contractual remedy framework and applying contractual prescription rules.

Supreme Court’s determination that the condition is void for being an undue restriction

  • Although the Supreme Court agreed that prescription did not bar the action, it reached a separate and decisive conclusion: the specific condition in the deed prohibiting alienation for 100 years constituted an undue, unreasonable and impermissible restriction on a fundamental attribute of ownership—namely, the right to dispose of property—and is contrary to public policy.
  • The Court analogized to limitations on testamentary inalienability (Article 494’s 20‑year limit on prohibition of partition and Article 870’s prohibition of declaring property inalienable for more than 20 years) to demonstrate that perpetual or excessively long restraints on alienability are disfavored. Because donations are gratuitous transfers akin in some respects to testamentary dispositions, the same policy considerations restraining unreasonable inalienability in wills were applied by analogy to donations.

Legal effect of an unlawful or impossible condition under Article 727 and application to this case

  • Under Article 727 of the Civil Code, an illegal, impossible, or contrary-to-policy condition is treated as not imposed. The Court held that the 100-year prohibition on alienation was such an illegal/impossible condition; consequently it must be considered as not written into the deed. With that provision struck as a nullity, the subsequent sale to the Ignao spouses did not violate any operative restriction in the donation. The deed of donation therefore remained effective as a transfer, but there was no legal basis to nullify the sale; hence the heirs’ complaint lacked a cause of action.

Authority to decide an issue not expressly pleaded and decision on remand necessity

  • The Court acknowledged that the validity of the restrictive clause was not specifically pleaded by the parties, but held that the issue was necessarily interwoven with the assignment of error and the CA’s interpretation of the clause, and thus the Supreme Court

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