G.R. No. 214590. April 27, 2022.
ESTATE OF SUSANO J. RODRIGUEZ, REPRESENTED BY ITS ATTORNEY-IN-FACT VIRGILIO R. VALENZUELA, PETITIONER, VS. REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF HEALTH, RESPONDENT.

FACTS

On September 12, 1968, Susano J. Rodriguez executed a Deed of Conditional Donation in favor of the Republic of the Philippines, represented by the Department of Health, over a 322,839-square meter parcel of land in Pili, Camarines Sur. The donation was for the purpose of constructing a mental hospital, subject to conditions including: (1) exclusive use as a hospital site; (2) naming it “Don Susano J. Rodriguez Memorial Mental Hospital”; (3) completion of construction within two years; (4) construction of a concrete road within two years; (5) no lease, conveyance, or encumbrance of the property without the donor’s prior approval; and (6) that title shall remain with the donor until all conditions are complied with, and violation shall automatically revoke the donation, reverting title and improvements to the donor.
On September 29, 2008, the Estate of Susano J. Rodriguez, represented by attorney-in-fact Virgilio R. Valenzuela, filed a complaint for revocation of donation and forfeiture of improvements against the Republic, alleging violation of the fifth condition by allowing residential and commercial use of a portion of the property. The Republic argued the estate lacked legal capacity to sue, the action had prescribed, and the condition against encumbrance was an undue restriction on ownership.
The Regional Trial Court (RTC) revoked the donation concerning 27 hectares (the unused portion) and ordered its reconveyance to Rodriguez’s heirs, ruling the donation was onerous and governed by contract law, and the action had not prescribed. The Court of Appeals (CA) reversed the RTC and dismissed the complaint, holding the donation was a modal one under the law on donations, not an onerous one under contract law, and the action to revoke had prescribed under Article 764 of the Civil Code, which requires the action to be brought within four years from the non-compliance with the condition.

ISSUE

Whether the Court of Appeals correctly dismissed the complaint on the ground that the action for revocation of the donation had prescribed.

RULING

Yes, the Court of Appeals was correct. The Supreme Court affirmed the CA’s decision.
The donation is a modal one, not an onerous one. A modal donation imposes a charge, burden, or condition upon the donee, the fulfillment of which is not considered a quid pro quo or compensatory equivalent for the donation. In contrast, an onerous donation imposes a burden equivalent to the value of the donation. The conditions in the deed (exclusive use for a hospital, construction within two years, naming rights, non-encumbrance) are charges on the donee for the public purpose of the donation, not equivalent compensations for the property. Therefore, the law on donations, specifically Article 764 of the Civil Code, governs.
Under Article 764 of the Civil Code, the action for revocation of a modal donation on the ground of non-fulfillment of the conditions must be brought within four years from the date the condition should have been complied with. The condition to complete construction and the concrete road was to be fulfilled within two years from September 12, 1968, or by September 12, 1970. The action for revocation based on non-compliance should have been filed by September 12, 1974. The complaint filed in 2008 was filed 34 years beyond the prescriptive period and is therefore barred.
The stipulation for automatic reversion without judicial action does not negate the application of the prescriptive period under Article 764. The Court has held that even with such a stipulation, the donor must still bring an action for reversion within the four-year prescriptive period. The estate’s cause of action accrued upon the Republic’s failure to complete construction by the stipulated date in 1970, not from its later failure to eject informal settlers. Consequently, the action had long prescribed.