G.R. No. 197115 & G.R. No. 197267, March 23, 2015
Republic of the Philippines, represented by the Secretary of Agriculture, Petitioner, vs. Federico Daclan, Josefina Collado and her husband Federico Daclan, Teodoro Daclan and Minviluz Daclan as surviving heirs of deceased Jose Daclan, Respondents. ( G.R. No. 197115 ) / Federico Daclan, Josefina Collado, Teodoro Daclan and Minviluz Daclan as surviving heirs of deceased Jose Daclan, Petitioners, vs. Republic of the Philippines, and represented by the Secretary of Agriculture and Province of La Union, represented by its Provincial Governor, Respondents. (G.R. No. 197267)

FACTS

In May 1972, the Agoo Breeding Station was established by the Department of Agriculture through the Bureau of Animal Industry (BAI). Respondents Federico Daclan, Josefina Collado, Teodoro Daclan, and the heirs of Jose Daclan (the Daclans) executed Deeds of Donation covering four parcels of land in favor of the Republic of the Philippines for the establishment of the breeding station. The deeds contained two key conditions: 1) the land shall be used solely for the breeding station and not for any other purpose without the donor’s consent, and 2) in case of non-use, abandonment, or cessation of BAI activities, possession and ownership shall automatically revert to the donor. In 1991, pursuant to the Local Government Code, the operation of the breeding station was devolved to the Province of La Union. Sometime after the donations, a 1.5-hectare portion of the total 13-hectare donated property (not from the Daclans’ specific lots) was used to construct the La Union Medical Center. In 2003, the Daclans demanded the return of their donated lands, claiming the breeding station had ceased operations and the land was abandoned. They filed a case for specific performance. The Regional Trial Court dismissed the complaint, finding the breeding station was still operational under the Province’s management. The Court of Appeals reversed the RTC, ordering the return of the donated parcels to the Daclans, ruling that the devolution constituted a violation of the donation’s conditions, resulting in the automatic reversion of the property.

ISSUE

Whether the devolution of the breeding station’s operation from the Bureau of Animal Industry to the Province of La Union, and the use of a portion of the donated property for a medical center, triggered the automatic reversion clause in the Deeds of Donation, entitling the Daclans to the return of their specific donated parcels.

RULING

No. The Supreme Court reversed the Court of Appeals and reinstated the RTC decision dismissing the complaint. The Court held that the automatic reversion clause was not triggered. First, the devolution of functions to the local government unit did not constitute a cessation of the breeding station’s activities; the station remained operational, as evidenced by the presence of animals and caretakers paid by the Province. The donation was made to the Republic for a public purpose, and the devolution was a lawful transfer of that public function within the government machinery, not an abandonment. Second, the construction of the La Union Medical Center on a 1.5-hectare portion did not violate the condition as to the Daclans’ specific parcels, as that portion was not part of the land donated by the Daclans but by other donors not party to the case. The condition on use was imposed on each specific donated parcel. Since the Daclans’ donated lands remained part of the breeding station, no right of reversion accrued to them.