G.R. No. 199666, October 07, 2019
Camarines Sur Teachers and Employees Association, Inc., represented by its President, Dr. Antonio A. Raluta, Petitioner, vs. Province of Camarines Sur, represented by Governor Luis Raymund F. Villafuerte, Jr., Respondent.

FACTS

The Province of Camarines Sur is the registered owner of a parcel of land. On September 28, 1966, the Province, through then Governor Apolonio G. Maleniza, donated a 600-square-meter portion to the Camarines Sur Teachers and Employees Association, Inc. (CASTEA) via a Deed of Donation Inter Vivos. The deed contained conditions, including that the property shall not be “sold, mortgaged, or encumbered” and shall be used for the benefit of the members. On September 29, 1995, CASTEA entered into a 20-year lease contract with Bodega Glassware over a portion of the building it constructed on the donated property. On October 14, 2007, the Province, through Governor Luis Raymund F. Villafuerte, Jr., executed a Deed of Revocation of Donation, citing CASTEA’s violation of the non-encumbrance condition. After a demand to vacate, the Province filed an unlawful detainer case against CASTEA before the Municipal Trial Court in Cities (MTCC) on February 13, 2008. The MTCC ruled in favor of the Province, ordering CASTEA to vacate and pay compensation. CASTEA appealed to the Regional Trial Court (RTC), which reversed the MTCC, dismissing the case on grounds that revocation required a judicial action and that the action had prescribed. The Province filed a petition for certiorari with the Court of Appeals (CA), which granted the petition, reinstated the MTCC decision, and ruled that the lease was an encumbrance violating the donation and that prescription did not run against the Province. CASTEA elevated the case to the Supreme Court via a petition for review on certiorari.

ISSUE

The core issue is whether the Province of Camarines Sur could validly revoke the donation and recover possession of the property through an action for unlawful detainer, based on CASTEA’s alleged violation of the condition not to encumber the property by entering into a lease agreement.

RULING

The Supreme Court GRANTED the petition, REVERSED and SET ASIDE the Decision of the Court of Appeals, and REINSTATED the Decision of the Regional Trial Court dismissing the unlawful detainer case.
The Court held that the donation was an onerous one (a modal donation), as it imposed a charge (the construction of a building for the benefit of members) upon the donee. For onerous donations, the rules on obligations and contracts generally apply, not the specific rules on revocation of donations under Article 764 of the Civil Code. The remedy for violation of a condition in an onerous donation is resolution or rescission under Article 1191 of the Civil Code, not revocation. This resolution must be sought through judicial action, as the donor cannot unilaterally resolve the contract. Since the Province did not file an action for resolution but instead executed a unilateral Deed of Revocation and then filed an unlawful detainer case, the basis for the ejectment suit (that CASTEA’s possession became illegal upon revocation) was invalid. Furthermore, the Court found that the lease to Bodega Glassware, which generated income used for member benefits, could be considered in substantial compliance with the donation’s purpose of benefiting the members, and thus may not constitute a breach warranting resolution. Consequently, the unlawful detainer action, which presupposes the expiration of the right to possess, had no leg to stand on as the donation had not been judicially rescinded. The Court did not definitively rule on the prescription issue, as the dismissal was primarily based on the improper cause of action.