Central Philippine University v. Court of Appeals

a. As to Taking Effect — Effect of resolutory conditions on donations *inter vivos* (Art. 731) · d. Revocation and Reduction — Failure to comply with conditions (Art. 764): period to fulfil

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Case DigestChapter XI — Donation

Central Philippine University v. Court of Appeals

G.R. No. 112127 · July 17, 1995 · Supreme Court

a. As to Taking Effect — Effect of resolutory conditions on donations *inter vivos* (Art. 731) · d. Revocation and Reduction — Failure to comply with conditions (Art. 764): period to fulfil

Gist

Don Ramon Lopez donated Iloilo land to a college in 1939 on condition it build a medical school there. Fifty years later no school existed and the university was negotiating to swap the land away. The Court of Appeals wanted the case remanded to fix a period for compliance; the Supreme Court refused — fifty years is already more than reasonable — and ordered the land reconveyed.

Core Doctrine

A donation of land on condition that the donee build a school is subject to a resolutory, not a suspensive, condition — because the donee must first own the land in order to build on it. Under Article 733 an onerous donation is governed by the law on contracts, and under Article 1181 the non-fulfilment of a resolutory condition extinguishes the rights already acquired. Where a reasonable period has plainly elapsed, a court need not fix one under Article 1197.

Facts

In 1939, Don Ramon Lopez, Sr. executed a deed of donation in favour of Central Philippine College (now Central Philippine University) over a parcel of land in Iloilo.
The deed imposed three conditions: the land was to be used exclusively for a medical college; it was not to be sold or encumbered; and it was to be named the "Ramon Lopez Campus," with its net income placed in a fund for campus improvements. (Building and operating a medical college is a burden the Court treated as the equivalent of the donation itself — which made the donation onerous and sent it to the law on contracts.)
In the decades that followed, CPU never established the medical college, and instead allegedly negotiated with the National Housing Authority for an exchange of the property. Negotiating to swap the land away is the opposite of devoting it exclusively to a medical college, and it is what turned long inaction into a live breach.
On May 31, 1989 — more than fifty years after the donation — the heirs of Don Ramon Lopez, Sr. sued CPU for annulment of donation, reconveyance and damages. (Fulfilment depended on the exclusive will of the donee, which is why CPU could not raise prescription against heirs who had no power to make it perform.)
On May 31, 1991, the trial court declared the donation null and void and ordered reconveyance, finding CPU had failed to comply with the conditions.
On June 18, 1993, the Court of Appeals reversed, ruling that although the conditions were resolutory, the donor had fixed no period for compliance, and remanded the case for the trial court to fix one.
CPU elevated the matter to the Supreme Court, which decided on July 17, 1995.

Issue

Whether the condition to establish a medical college on the donated land is a suspensive or a resolutory condition, and what the effect of its non-fulfilment is on a donation inter vivos.

Secondary issue. Whether the action for revocation is barred by the statute of limitations.

Ruling

Main issue. It is a RESOLUTORY CONDITION, and the donation is REVOKED. The donation was onerous, the burden of establishing a medical college being the equivalent of the donation itself, so under Article 733 it is governed by the rules on contracts. Under Article 1181 the acquisition of rights depends on a suspensive condition while their extinguishment depends on a resolutory one — and the requirement to build a school is resolutory: "it is not correct to say that the schoolhouse had to be constructed before the donation became effective … otherwise, it would be invading the property rights of the donor." The donee must own the land first in order to have the legal right to build on it, so ownership passed at once and the later failure to build extinguishes it. As to the absence of a stipulated period, Article 1197 does not require a court to fix one where a reasonable period has already elapsed: "More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of the opportunity to comply with the condition," and fixing one now would be "a mere technicality and formality" serving only delay. Under Article 1378, doubt is resolved for the least transmission of rights.

Secondary issue. NO. Fulfilment of the condition depended on the exclusive will of the donee. Having accepted the donation and acknowledged its obligation, CPU cannot invoke the statute of limitations against the donor's heirs when it was CPU itself that chose not to act.

The May 31, 1991 decision of the Regional Trial Court of Iloilo, Branch 34, was REINSTATED and AFFIRMED, and the Court of Appeals' decision of June 18, 1993 MODIFIED accordingly; CPU was directed to reconvey to the private respondents Lot No. 3174-B-1 of subdivision plan Psd-1144, covered by TCT No. T-3910-A, within thirty days from finality, with costs against petitioner.

"When a person donates land to another on the condition that the latter would build upon the land a school, the condition imposed is not a condition precedent or a suspensive condition but a resolutory one."

Ratio

Classification of the donation. The donation was onerous, imposing a burden — the establishment of a medical college — considered the equivalent of the donation itself, so under Article 733 it is governed by the rules on contracts.
Resolutory versus suspensive. Under Article 1181, the acquisition of rights depends on a suspensive condition while the extinguishment of rights already acquired depends on a resolutory one. The requirement to build a school is resolutory.
The ownership-before-construction test. "It is not correct to say that the schoolhouse had to be constructed before the donation became effective … otherwise, it would be invading the property rights of the donor." The donee must be the owner of the land first to have the legal right to build upon it; therefore ownership passed at present, and the subsequent failure to build operates to extinguish that ownership.
Prescription and the exclusive-will rule. Fulfilment of the condition depended on the exclusive will of the donee. Having accepted the donation and acknowledged its obligation, CPU could not later claim the statute of limitations barred the donor's heirs when the donee itself chose not to act.
Expiration of a reasonable period. While a court must generally fix a period under Article 1197 where none is stipulated, that is inapplicable once a reasonable period has passed. Fifty years of inaction is more than reasonable, and fixing a period now would be "a mere technicality and formality."
Rule of least transmission. Under Article 1378, doubts as to a gratuitous contract are resolved in favour of the least transmission of interests.

Doctrine

Resolutory nature of building conditions: "When a person donates land to another on the condition that the latter would build upon the land a school, the condition imposed is not a condition precedent or a suspensive condition but a resolutory one."
Automatic reversion clauses: where a deed provides for automatic reversion on breach, judicial intervention is not required to revoke, though it may be needed to confirm the propriety of the rescission if the donee disputes it.
Effect of long inaction: "The general rule [of fixing a period] however cannot be applied … More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of the opportunity to comply with the condition."
The exclusive-will bar: a donee whose own choice defeated the condition cannot plead prescription against the donor's heirs.

Assigned twice. The syllabus lists this case under a. As to Taking Effect — Effect of resolutory conditions on donations inter vivos (Art. 731) and again under d. Revocation and Reduction — Failure to comply with conditions (Art. 764): period to fulfil. Both assignments are answered from the single digest below — the supra entry re-uses this holding rather than adding a new one. The two headings are the same holding read forwards and backwards: the condition is resolutory, so rights already vested are extinguished on breach; and where the deed fixes no time to perform, the donee gets a reasonable period, not an unlimited one.

Full Digest — Recitation Format

I. Gist and Central Doctrine

Relationship to requested topic: DIRECT.

This case involves a petition for review of a Court of Appeals decision in an action for annulment of donation and reconveyance filed by the heirs of a donor against a university for failing to comply with the conditions of a 1939 gift. While the appellate court ordered a remand to fix a period for compliance, the Supreme Court reversed and declared the donation revoked. The Court held that a donation of land made on the condition that the donee build a school is subject to a resolutory condition, not a suspensive one, because the donee must first become the owner of the land to legally construct the required building. The single central doctrine is that under Article 733 and Article 1181 of the Civil Code, a donation with an onerous cause is governed by the law on contracts, and the non-fulfilment of a resolutory condition therein results in the extinguishment of the donee's rights and the revocation of the donation.

II. Chronological Narration of Material Facts

In 1939, Don Ramon Lopez, Sr. executed a deed of donation in favour of the Central Philippine College (now Central Philippine University) covering a parcel of land in Iloilo.
The deed imposed three conditions: (1) the land be used exclusively for a medical college; (2) the land shall not be sold or encumbered; and (3) the land be named "Ramon Lopez Campus" with its net income placed in a specific fund for campus improvements.
In the decades following the donation, CPU failed to establish the medical college and instead allegedly negotiated with the National Housing Authority for an exchange of the property.
On May 31, 1989, more than fifty years after the execution of the deed, the heirs of Don Ramon Lopez, Sr. filed an action for annulment of donation, reconveyance and damages against CPU.
On May 31, 1991, the trial court declared the donation null and void and ordered reconveyance, finding that CPU failed to comply with the conditions.
On June 18, 1993, the Court of Appeals reversed the trial court, ruling that while the conditions were resolutory, the donor had failed to fix a period for compliance; it therefore remanded the case to the trial court to fix that period.
CPU elevated the matter to the Supreme Court, which decided on July 17, 1995.

III. Arguments of the Parties

A. Petitioner (Central Philippine University)

The action is barred by prescription. The annotations in the certificate of title are not resolutory conditions but mere onerous obligations that do not render the donation automatically revocable upon non-compliance.

B. Respondents (Heirs of Don Ramon Lopez, Sr.)

The donation was onerous and subject to resolutory conditions that CPU failed to fulfil for half a century. The long-standing failure to comply justifies immediate revocation and return of the property.

C. Common Ground

The execution of the 1939 deed, and the fact that no medical college has been built on the site, are undisputed.

IV. Issues

A. MAIN ISSUE

Whether the condition to establish a medical college on the donated land is a suspensive condition or a resolutory condition, and what the legal effect of its non-fulfilment is on a donation inter vivos.

B. SECONDARY ISSUES

Whether the action for revocation of the donation is barred by the statute of limitations.

V. Ruling / Disposition

A. MAIN ISSUE

RESOLUTORY CONDITION; REVOCATION.

B. SECONDARY ISSUES

NO.

FALLO. "WHEREFORE, The decision of the Regional Trial Court of Iloilo, Br. 34, of 31 May 1991 is REINSTATED and AFFIRMED, and the decision of the Court of Appeals of 18 June 1993 is accordingly MODIFIED. Consequently, petitioner is directed to reconvey to private respondents Lot No. 3174-B-1 of the subdivision plan Psd-1144 covered by Transfer Certificate of Title No. T-3910-A within thirty (30) days from the finality of this judgment. Costs against petitioner. SO ORDERED."

VI. Ratio Decidendi and Doctrines

A. Ratio Decidendi

Classification of the donation (Art. 733). The Court determined the donation was onerous because it imposed a burden — the establishment of a medical college — considered the equivalent of the donation itself. Under Article 733, onerous donations are governed by the rules on contracts.
Resolutory vs. suspensive condition (Art. 1181). The Court applied Article 1181, which states that the acquisition of rights depends on a suspensive condition, while the extinguishment of rights depends on a resolutory condition. It held that the requirement to build a school is a resolutory condition.
The "ownership before construction" test. The Court reasoned that "it is not correct to say that the schoolhouse had to be constructed before the donation became effective … otherwise, it would be invading the property rights of the donor." The donee must be the owner of the land first to have the legal right to build upon it; therefore ownership passed at present, and the subsequent failure to build operates to extinguish that ownership.
Prescription and the "exclusive will" rule. Regarding prescription, the Court noted that fulfilment of the condition depended upon the exclusive will of the donee. Because CPU accepted the donation and acknowledged its obligation, it could not later claim that the statute of limitations barred the donor's heirs when the donee itself chose not to act.
Expiration of a reasonable period (Art. 1197). While generally a court must fix a period if one is not stipulated, the Court held this inapplicable when a reasonable period — fifty years — has already passed. Fixing a period after five decades of inaction would be "a mere technicality and formality" that serves no purpose but delay.
Rule of least transmission (Art. 1378). Doubts regarding the transmission of rights are resolved in favour of the least transmission of interests.

B. Doctrines/Rules

Resolutory Nature of Building Conditions: "When a person donates land to another on the condition that the latter would build upon the land a school, the condition imposed is not a condition precedent or a suspensive condition but a resolutory one."
Automatic Revocation Clause: If a deed provides for automatic reversion upon breach, judicial intervention is not required to revoke, though it may be required to confirm the propriety of the rescission if the donee disputes it.
Effect of Long Inaction: "The general rule [of fixing a period] however cannot be applied … More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of the opportunity to comply with the condition."

C. Limitations/Exceptions

The Court noted that the period for establishing a college cannot always be quantified in years, given external factors such as government regulations — but that this does not grant the donee an infinite amount of time to leave the property idle.
The holding on prescription rests on the condition having depended on the donee's own will; a condition whose fulfilment turned on outside events would present a different question.

D. Topic Integration

This case is DIRECT authority for "effect of resolutory conditions on donations inter vivos." It provides the definitive test for identifying such conditions: if the act required of the donee — building a structure — necessitates that the donee already hold title to the land, the condition is resolutory.
It illustrates that the rights acquired by the donee are immediately vested but remain subject to total loss and extinguishment upon non-compliance with the onerous burden.
Under its second assignment — Article 764, period to fulfil — it teaches that where the deed fixes no time for performance, the donee is allowed a reasonable period, not an unlimited one, and a court will not manufacture a fresh period for a donee that has already exhausted a generous one.

VII. Separate Opinions

Davide, Jr., J., dissenting. He agrees the donation is onerous or modal but disagrees with bypassing Article 1197. He argues that (1) the "conditions" are not resolutory conditions in the technical sense of Article 1181 but are charges or burdens; (2) it is inconsistent to call the donation "basically gratuitous" while also labelling it "onerous"; (3) the Court must fix a period under Article 1197, because the donor contemplated one, and the donee's rights cannot be extinguished until such a court-fixed period has arrived and lapsed; and (4) the action is subject to a ten-year prescriptive period under Article 1144(1) for written contracts, counted from the expiration of the time allowed for compliance.

(Quiason and Kapunan, JJ., concurring in the main opinion.)

Cited Laws & Provisions

Every statute, rule, and issuance the decision turns on — the text as written, and the work it does in this case.

Civil Code

Article 733, Civil Code

Civil Code of the Philippines (R.A. No. 386), Book III (Different Modes of Acquiring Ownership), Title III (Donation), Chapter 1 (Nature of Donations)

Donations with an onerous cause shall be governed by the rules on contracts and remuneratory donations by the provisions of the present Title as regards that portion which exceeds the value of the burden imposed. (622)

Why it is cited here

The classification that opens the door to contract law, and the reason the case is decided by obligations doctrine rather than by the law on donations.

"Donations with an onerous cause shall be governed by the rules on contracts."

The 1939 deed imposed three conditions: the land was to be used exclusively for a medical college; it could not be sold or encumbered; and it was to be named the "Ramon Lopez Campus," its net income going to a fund for campus improvements.

Building and operating a medical college is a burden the Court regarded as "considered the equivalent of the donation itself," which makes the donation onerous. Once that is settled, the analysis moves out of Articles 725–773 and into the general law of obligations — which is why Articles 1181, 1197 and 1378 do the work in this decision.

Compare City of Manila v. Rizal Park Co., the same article's mirror image: there the donee performed the burden and could compel conveyance. Here the donee did not, for fifty years, and lost the land.

Civil Code

Article 1181, Civil Code

Civil Code of the Philippines (R.A. No. 386), Book IV (Obligations and Contracts), Title I (Obligations), Chapter 3 (Different Kinds of Obligations), Section 1 (Pure and Conditional Obligations)

In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. (1114)

Why it is cited here

The distinction the whole case turns on, and the test the Court supplies for drawing it.

"In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition."

A suspensive condition postpones the acquisition of rights; a resolutory condition extinguishes rights already held. CPU argued the building requirement was a mere onerous obligation not producing automatic revocation; the heirs argued it was resolutory.

The Court's reasoning is the memorable part — call it the ownership-before-construction test. "It is not correct to say that the schoolhouse had to be constructed before the donation became effective … otherwise, it would be invading the property rights of the donor." A donee cannot lawfully build on land he does not own. So ownership must pass first, which means the condition cannot be suspensive; it can only be resolutory, operating to take back an estate already vested.

The generalisable rule: if the act required of the donee presupposes that the donee already holds title, the condition is resolutory.

Civil Code

Article 1197, Civil Code

Civil Code of the Philippines (R.A. No. 386), Book IV (Obligations and Contracts), Title I (Obligations), Chapter 3 (Different Kinds of Obligations), Section 2 (Obligations With a Period)

If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was intended, the courts may fix the duration thereof.

The courts shall also fix the duration of the period when it depends upon the will of the debtor.

In every case, the courts shall determine such period as may under the circumstances have been probably contemplated by the parties. Once fixed by the courts, the period cannot be changed by them. (1128a)

Why it is cited here

The provision the Court of Appeals applied and the Supreme Court set aside — and the second assignment this case carries.

A court may fix the period when an obligation does not state one but a period "was intended"; the period so fixed then becomes part of the obligation.

The deed set no deadline for building the college, so the appellate court remanded the case for the trial court to fix one. That is the orthodox route, and Macasaet v. Macasaet shows the Court declining to take it for a different reason.

Here the Court declined because the period had, in substance, already run: "More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of the opportunity to comply with the condition." Fixing a period after five decades of inaction would be "a mere technicality and formality" serving only delay.

On prescription the Court added a point worth keeping: fulfilment depended on the exclusive will of the donee. Having accepted the donation and acknowledged the obligation, CPU could not invoke the statute of limitations against the donor's heirs when it was CPU's own choice not to perform.

Civil Code

Article 764, Civil Code

Civil Code of the Philippines (R.A. No. 386), Book III (Different Modes of Acquiring Ownership), Title III (Donation), Chapter 4 (Revocation and Reduction of Donations)

The donation shall be revoked at the instance of the donor, when the donee fails to comply with any of the conditions which the former imposed upon the latter.

In this case, the property donated shall be returned to the donor, the alienations made by the donee and the mortgages imposed thereon by him being void, with the limitations established, with regard to third persons, by the Mortgage Law and the Land Registration laws.

This action shall prescribe after four years from the noncompliance with the condition, may be transmitted to the heirs of the donor, and may be exercised against the donee's heirs. (647a)

Why it is cited here

The donations-law route to the same destination, carded because the syllabus assigns this case to it under period to fulfil.

The article lets the donor seek revocation "when the donee fails to comply with any of the conditions which the former imposed," the action prescribing in four years from the non-compliance, and it does not pass to the donor's heirs except in limited circumstances.

The tension the case leaves is real and worth noticing. If Article 764 governed, a four-year clock would be hard to reconcile with a suit filed fifty years after the donation. The Court avoids it by treating the donation as onerous, so that Article 733 sends the matter to the law on contracts and the resolutory-condition analysis of Article 1181 applies instead — with the "exclusive will of the donee" reasoning answering prescription.

That is why the case is assigned under period to fulfil rather than under the four-year period: its lesson is that where the deed fixes no time, the donee does not get forever, and a court will not manufacture a fresh period for a donee who has already had a reasonable one.

Civil Code

Article 1378, Civil Code

Civil Code of the Philippines (R.A. No. 386), Book IV (Obligations and Contracts), Title II (Contracts), Chapter 5 (Interpretation of Contracts)

When it is absolutely impossible to settle doubts by the rules established in the preceding articles, and the doubts refer to incidental circumstances of a gratuitous contract, the least transmission of rights and interests shall prevail. If the contract is onerous, the doubt shall be settled in favor of the greatest reciprocity of interests.

If the doubts are cast upon the principal object of the contract in such a way that it cannot be known what may have been the intention or will of the parties, the contract shall be null and void. (1289)

Why it is cited here

The tie-breaker, invoked here as it is in Sicad v. Court of Appeals.

Doubts about a gratuitous contract are resolved "in favor of the least transmission of rights and interests."

Where the deed is silent or ambiguous — as this one was on the time for performance — the construction that transmits less to the donee prevails. Applied to a fifty-year default, that means resolving the doubt against CPU's continued ownership rather than in favour of indefinite indulgence.

Note the mild awkwardness the dissent seizes on: the Court calls the donation onerous for the purpose of applying contract law, then reaches for a canon about gratuitous contracts. Justice Davide thought that inconsistent. The majority's position is that a donation with a charge remains basically gratuitous in its cause even while the charge attracts the rules on contracts.

Cited laws & provisions

Article 733, Civil Code

Civil Code

Civil Code of the Philippines (R.A. No. 386), Book III (Different Modes of Acquiring Ownership), Title III (Donation), Chapter 1 (Nature of Donations)

Why it is cited here

The classification that opens the door to contract law, and the reason the case is decided by obligations doctrine rather than by the law on donations.

"Donations with an onerous cause shall be governed by the rules on contracts."

Full entry below ↓

Article 1181, Civil Code

Civil Code

Civil Code of the Philippines (R.A. No. 386), Book IV (Obligations and Contracts), Title I (Obligations), Chapter 3 (Different Kinds of Obligations), Section 1 (Pure and Conditional Obligations)

Why it is cited here

The distinction the whole case turns on, and the test the Court supplies for drawing it.

The generalisable rule: if the act required of the donee presupposes that the donee already holds title, the condition is resolutory.

Full entry below ↓

Article 1197, Civil Code

Civil Code

Civil Code of the Philippines (R.A. No. 386), Book IV (Obligations and Contracts), Title I (Obligations), Chapter 3 (Different Kinds of Obligations), Section 2 (Obligations With a Period)

If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was intended, the courts may fix the duration thereof.

The courts shall also fix the duration of the period when it depends upon the will of the debtor.

Why it is cited here

The provision the Court of Appeals applied and the Supreme Court set aside — and the second assignment this case carries.

A court may fix the period when an obligation does not state one but a period "was intended"; the period so fixed then becomes part of the obligation.

Full entry below ↓

Article 764, Civil Code

Civil Code

Civil Code of the Philippines (R.A. No. 386), Book III (Different Modes of Acquiring Ownership), Title III (Donation), Chapter 4 (Revocation and Reduction of Donations)

The donation shall be revoked at the instance of the donor, when the donee fails to comply with any of the conditions which the former imposed upon the latter.

This action shall prescribe after four years from the noncompliance with the condition, may be transmitted to the heirs of the donor, and may be exercised against the donee's heirs. (647a)

Why it is cited here

The donations-law route to the same destination, carded because the syllabus assigns this case to it under period to fulfil.

Full entry below ↓

Article 1378, Civil Code

Civil Code

Civil Code of the Philippines (R.A. No. 386), Book IV (Obligations and Contracts), Title II (Contracts), Chapter 5 (Interpretation of Contracts)

Why it is cited here

The tie-breaker, invoked here as it is in Sicad v. Court of Appeals.

Doubts about a gratuitous contract are resolved "in favor of the least transmission of rights and interests."

Full entry below ↓

Facts

In 1939, Don Ramon Lopez, Sr. executed a deed of donation in favour of Central Philippine College (now Central Philippine University) over a parcel of land in Iloilo.
The deed imposed three conditions: the land was to be used exclusively for a medical college; it was not to be sold or encumbered; and it was to be named the "Ramon Lopez Campus," with its net income placed in a fund for campus improvements. (Building and operating a medical college is a burden the Court treated as the equivalent of the donation itself — which made the donation onerous and sent it to the law on contracts.)
In the decades that followed, CPU never established the medical college, and instead allegedly negotiated with the National Housing Authority for an exchange of the property. Negotiating to swap the land away is the opposite of devoting it exclusively to a medical college, and it is what turned long inaction into a live breach.
On May 31, 1989 — more than fifty years after the donation — the heirs of Don Ramon Lopez, Sr. sued CPU for annulment of donation, reconveyance and damages. (Fulfilment depended on the exclusive will of the donee, which is why CPU could not raise prescription against heirs who had no power to make it perform.)
On May 31, 1991, the trial court declared the donation null and void and ordered reconveyance, finding CPU had failed to comply with the conditions.
On June 18, 1993, the Court of Appeals reversed, ruling that although the conditions were resolutory, the donor had fixed no period for compliance, and remanded the case for the trial court to fix one.
CPU elevated the matter to the Supreme Court, which decided on July 17, 1995.

Issue

Whether the condition to establish a medical college on the donated land is a suspensive or a resolutory condition, and what the effect of its non-fulfilment is on a donation inter vivos.

Secondary issue. Whether the action for revocation is barred by the statute of limitations.

Ruling

"When a person donates land to another on the condition that the latter would build upon the land a school, the condition imposed is not a condition precedent or a suspensive condition but a resolutory one."

Ratio

Classification of the donation. The donation was onerous, imposing a burden — the establishment of a medical college — considered the equivalent of the donation itself, so under Article 733 it is governed by the rules on contracts.
Resolutory versus suspensive. Under Article 1181, the acquisition of rights depends on a suspensive condition while the extinguishment of rights already acquired depends on a resolutory one. The requirement to build a school is resolutory.
The ownership-before-construction test. "It is not correct to say that the schoolhouse had to be constructed before the donation became effective … otherwise, it would be invading the property rights of the donor." The donee must be the owner of the land first to have the legal right to build upon it; therefore ownership passed at present, and the subsequent failure to build operates to extinguish that ownership.
Prescription and the exclusive-will rule. Fulfilment of the condition depended on the exclusive will of the donee. Having accepted the donation and acknowledged its obligation, CPU could not later claim the statute of limitations barred the donor's heirs when the donee itself chose not to act.
Expiration of a reasonable period. While a court must generally fix a period under Article 1197 where none is stipulated, that is inapplicable once a reasonable period has passed. Fifty years of inaction is more than reasonable, and fixing a period now would be "a mere technicality and formality."
Rule of least transmission. Under Article 1378, doubts as to a gratuitous contract are resolved in favour of the least transmission of interests.

Doctrine

Resolutory nature of building conditions: "When a person donates land to another on the condition that the latter would build upon the land a school, the condition imposed is not a condition precedent or a suspensive condition but a resolutory one."
Automatic reversion clauses: where a deed provides for automatic reversion on breach, judicial intervention is not required to revoke, though it may be needed to confirm the propriety of the rescission if the donee disputes it.
Effect of long inaction: "The general rule [of fixing a period] however cannot be applied … More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of the opportunity to comply with the condition."
The exclusive-will bar: a donee whose own choice defeated the condition cannot plead prescription against the donor's heirs.

Assigned twice. The syllabus lists this case under a. As to Taking Effect — Effect of resolutory conditions on donations inter vivos (Art. 731) and again under d. Revocation and Reduction — Failure to comply with conditions (Art. 764): period to fulfil. Both assignments are answered from the single digest below — the supra entry re-uses this holding rather than adding a new one. The two headings are the same holding read forwards and backwards: the condition is resolutory, so rights already vested are extinguished on breach; and where the deed fixes no time to perform, the donee gets a reasonable period, not an unlimited one.

Full Digest — Recitation Format

I. Gist and Central Doctrine

Relationship to requested topic: DIRECT.

II. Chronological Narration of Material Facts

In 1939, Don Ramon Lopez, Sr. executed a deed of donation in favour of the Central Philippine College (now Central Philippine University) covering a parcel of land in Iloilo.
The deed imposed three conditions: (1) the land be used exclusively for a medical college; (2) the land shall not be sold or encumbered; and (3) the land be named "Ramon Lopez Campus" with its net income placed in a specific fund for campus improvements.
In the decades following the donation, CPU failed to establish the medical college and instead allegedly negotiated with the National Housing Authority for an exchange of the property.
On May 31, 1989, more than fifty years after the execution of the deed, the heirs of Don Ramon Lopez, Sr. filed an action for annulment of donation, reconveyance and damages against CPU.
On May 31, 1991, the trial court declared the donation null and void and ordered reconveyance, finding that CPU failed to comply with the conditions.
On June 18, 1993, the Court of Appeals reversed the trial court, ruling that while the conditions were resolutory, the donor had failed to fix a period for compliance; it therefore remanded the case to the trial court to fix that period.
CPU elevated the matter to the Supreme Court, which decided on July 17, 1995.

III. Arguments of the Parties

A. Petitioner (Central Philippine University)

B. Respondents (Heirs of Don Ramon Lopez, Sr.)

C. Common Ground

The execution of the 1939 deed, and the fact that no medical college has been built on the site, are undisputed.

IV. Issues

A. MAIN ISSUE

B. SECONDARY ISSUES

Whether the action for revocation of the donation is barred by the statute of limitations.

V. Ruling / Disposition

A. MAIN ISSUE

RESOLUTORY CONDITION; REVOCATION.

B. SECONDARY ISSUES

NO.

VI. Ratio Decidendi and Doctrines

A. Ratio Decidendi

Classification of the donation (Art. 733). The Court determined the donation was onerous because it imposed a burden — the establishment of a medical college — considered the equivalent of the donation itself. Under Article 733, onerous donations are governed by the rules on contracts.
Resolutory vs. suspensive condition (Art. 1181). The Court applied Article 1181, which states that the acquisition of rights depends on a suspensive condition, while the extinguishment of rights depends on a resolutory condition. It held that the requirement to build a school is a resolutory condition.
The "ownership before construction" test. The Court reasoned that "it is not correct to say that the schoolhouse had to be constructed before the donation became effective … otherwise, it would be invading the property rights of the donor." The donee must be the owner of the land first to have the legal right to build upon it; therefore ownership passed at present, and the subsequent failure to build operates to extinguish that ownership.
Prescription and the "exclusive will" rule. Regarding prescription, the Court noted that fulfilment of the condition depended upon the exclusive will of the donee. Because CPU accepted the donation and acknowledged its obligation, it could not later claim that the statute of limitations barred the donor's heirs when the donee itself chose not to act.
Expiration of a reasonable period (Art. 1197). While generally a court must fix a period if one is not stipulated, the Court held this inapplicable when a reasonable period — fifty years — has already passed. Fixing a period after five decades of inaction would be "a mere technicality and formality" that serves no purpose but delay.
Rule of least transmission (Art. 1378). Doubts regarding the transmission of rights are resolved in favour of the least transmission of interests.

B. Doctrines/Rules

Resolutory Nature of Building Conditions: "When a person donates land to another on the condition that the latter would build upon the land a school, the condition imposed is not a condition precedent or a suspensive condition but a resolutory one."
Automatic Revocation Clause: If a deed provides for automatic reversion upon breach, judicial intervention is not required to revoke, though it may be required to confirm the propriety of the rescission if the donee disputes it.
Effect of Long Inaction: "The general rule [of fixing a period] however cannot be applied … More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of the opportunity to comply with the condition."

C. Limitations/Exceptions

The Court noted that the period for establishing a college cannot always be quantified in years, given external factors such as government regulations — but that this does not grant the donee an infinite amount of time to leave the property idle.
The holding on prescription rests on the condition having depended on the donee's own will; a condition whose fulfilment turned on outside events would present a different question.

D. Topic Integration

This case is DIRECT authority for "effect of resolutory conditions on donations inter vivos." It provides the definitive test for identifying such conditions: if the act required of the donee — building a structure — necessitates that the donee already hold title to the land, the condition is resolutory.
It illustrates that the rights acquired by the donee are immediately vested but remain subject to total loss and extinguishment upon non-compliance with the onerous burden.
Under its second assignment — Article 764, period to fulfil — it teaches that where the deed fixes no time for performance, the donee is allowed a reasonable period, not an unlimited one, and a court will not manufacture a fresh period for a donee that has already exhausted a generous one.

VII. Separate Opinions

(Quiason and Kapunan, JJ., concurring in the main opinion.)