G.R. No. 199666, October 07, 2019

DOCTRINE:

The perceived single violation by CASTEA when weighed against its substantial compliance of the other “conditions” or prestations of the donation and the avowed purpose of the donation is, as it should be, considered insignificant to trigger the application of the automatic revocation clause.

FACTS:

In 1966, the Local Government of the Province of Camarines Sur thru then Governor Apolonio G. Maleniza donated a property covered by OCT No. 22 with an approximate area of Six Hundred (600) square meters to the Camarines Sur Teachers’ Association, Inc. (CASTEA) by virtue of the Deed of Donation Inter Vivos executed by the parties.

The condition of this donation is that the DONEE shall use the the land for no other purpose except the construction of its building to be used by Camarines Sur Teachers’ Association, Inc., in connection with its functions under its charter and by-laws. Provided that the DONEE shall not sell, mortgage or [e]ncumber the property herein donated including any and all improvements thereon in favor of any party and that the construction of the building shall be commenced within a period of one (1) year from and after the execution of this donation, otherwise, the donation shall be deemed automatically revoked.

In 2007, the Province executed a Deed of Revocation of Donation thru Governor Luis Raymund F. Villafuerte, Jr. and served a copy thereof to [CASTEA]. The Province’s claim of possession is based on the assertion that CASTEA had violated the condition which triggered an automatic reversion of ownership thereof. In 2008, it filed a case for Unlawful Detainer against CASTEA. 

The disputed breach emanates from the 20-year lease between CASTEA and Bodega Glassware, which CASTEA executed on September 29, 199571 or 29 years after the Deed of Donation that the Province executed on September 28, 1966.

CASTEA maintains that it is still the owner of the donated property and posits that the revocation of the donation is not valid, and the action therefor has prescribed. It argues that its act of leasing out to Bodega Glassware portion of the building it constructed on the donated property does not constitute selling, mortgaging or encumbering the donated property or any improvements thereof.

ISSUES: 

1. What kind of donation is involved?

2. Is the automatic revocation clause in the donation valid?

3. May Article 1191 of the Civil Code be applied to determine the propriety of the rescission or resolution of the donation in case of non-compliance with its conditions?

4. Whether CASTEA’s breach of the Deed of Donation, if any, warrants the automatic revocation of the donation

HELD:  

1. The donation is both modal and onerous.

Justice Eduardo P. Caguioa expounded on the different classifications of donations, viz.: According to its effects[,] donation may be classified into – 

1. Pure – Pure donations are those not subject to any future and uncertain event nor to a period.
2. Conditional – Conditional donations are those subject to a future and uncertain event which may either be suspensive or resolutory.
3. with a term –  Donations with a term are those whose demandability [or termination] depends on the arrival of a term which may also be either suspensive or resolutory.
4. Onerous. –  Onerous donations are those where a burden inferior in value to the property donated is imposed on the donee. 

This kind of donations includes those 

1. improper donations where a burden equal in value to the property donated is imposed; 
2. mixed donations. Mixed donation (negotium mixtum cum donatione) is one which contains an onerous transaction, e.g., a sale of a thing for a price lower than its value, made in the nature of a semi-donation.
3. Modal donations. Modal donation is one which imposes on the donee a prestation.  

In this connection the explanation of modal institution in succession provided in Article 882 is applicable. The prestation imposed on the donee may either be a burden or charge inferior in value to the property donated or services to be performed in the future. (Emphasis and underscoring supplied)

From an obligation point of view, there are two prestations imposed on CASTEA. One is to do, which is to use the donated property for the purpose intended and to construct the required building, and the other is not to do, which is not to sell, mortgage or encumber it to any person. 

• The prestation to construct a building is undoubtedly modal in nature as it imposed a prestation or obligation on CASTEA. Thus, the donation to CASTEA can properly be classified as a modal donation (because of CASTEA’s obligation to construct the required building) with a prestation not to alienate/encumber and an automatic revocation clause. 
• The donation may also be classified as an onerous donation because there is a burden imposed on the donee in the absence of proof that the burden or charge (cost of the building) is superior or greater than the value of the donated 600 square meters lot at the time of the donation in September 1966.

Whether the donation in question is classified as modal or onerous, there is no doubt that the rules governing contracts should prevail in the interpretation of the Deed of Donation pursuant to Articles 732 and 733 of the Civil Code.

2. YES. 

Yes, automatic revocation clause is valid under the Principle of autonomy of contracts. Article 1306 of the Civil Code allows the parties “to establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy.” In contracts law, parties may agree to give one or both of them the right to rescind a contract unilaterally.

While the legality of automatic revocation or rescission clauses in deeds of donation has been upheld, the courts are not precluded from determining whether their application or enforcement by the donors concerned are proper if the donees contest the revocation or rescission. If the court sustains its propriety, the court’s decision is not the act that revokes the donation but would be merely declaratory of the validity of the revocation.

3. Yes, Article 1191 is applicable. While Article 1191 applies to reciprocal obligations and donation essentially involves a unilateral act and there is an express revocation clause in the Deed of Donation, Article 1191 is nevertheless relevant in the determination of the nature of the breach or violation of the obligation that will justify its rescission.

The general rule is that rescission will not be permitted for a slight or casual breach of the contract, but only for such breaches as are so substantial and fundamental as to defeat the object of the parties in making the agreement.

4. In Article 764 of the Civil Code, which provides:

ART. 764. 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 non-compliance with the condition, may be transmitted to the heirs of the donor, and may be exercised against the donee’s heirs. (647a)

When the law states “when the donee fails to comply with any of the conditions” it implies that all the conditions or charges imposed must be complied with. 

Article 764 and the pertinent provisions on obligations and contracts, the Court takes the position that the violation of CASTEA in entering into the 20-year lease with Bodega Glassware should not be taken in isolation with the other prestations and conditions in the Deed of Donation, especially the purpose of the donation. While under Article 764, a single violation or non-fulfillment is sufficient to revoke a donation based on the phrase “any of the conditions,” its application must be circumscribed within the rules on obligations and contracts wherein substantial and fundamental breach as to defeat the object of the parties in making the agreement and substantial compliance are given due recognition and importance. Thus, a blind literal application of Article 764 without due consideration and regard to the peculiar circumstances of the donation at issue, bearing in mind the specific intention or purpose of the donor vis-a-vis the tangible benefits of the donation to the donee, is not adopted, bearing in mind the harshness of the consequence of revocation.

Thus, the perceived single violation by CASTEA when weighed against its substantial compliance of the other “conditions” or prestations of the donation and the avowed purpose of the donation is, as it should be, considered insignificant to trigger the application of the automatic revocation clause.
It is not disputed that CASTEA fully complied with its prestation to do: the building which it agreed to put up was constructed by CASTEA within the one-year period provided in the Deed of Donation. Avowedly the construction of the intended building is the major consideration of the donation. In fine, the revocation of the Deed of Donation by the Province is improper and lacks legal basis. However, given that CASTEA disregarded the provision of the Deed of Donation not to encumber the donated property, the Court awards nominal damages in favor of the Province in an amount equal to one half of the total rentals that CASTEA received from Bodega Glassware.

G.R. No. 190207, June 30, 2021

FACTS:

Lloyds Richfield purchased parcels of land within its vicinity and quarried limestones from these areas, which would then be used to manufacture cement. NAPOCOR entered into negotiations with Lloyds Richfield to create an easement of right of way over the parcels of land for the construction of transmission lines.   When negotiations failed, the NAPOCOR filed a Complaint for expropriation before the Regional Trial Court of Danao City relating to 7 lots owned by Lloyds . 

Lloyds Richfield demanded by way of compulsory claim that the NAPOCOR pay the fair market value of the parcels of land, since the construction of transmission lines over its properties would render the properties useless to it. It also demanded to be paid the fair market value ofthe limestone deposits in the parcels of land.

The Committee on Appraisal recommended an increase in the safety zone which would require NAPOCOR to  expropriate four more lots that were not originally cited in the Complaint. 

NAPOCOR insisted that 

1. That it could not be made to pay just compensation for the limestone deposits as these were minerals, which were owned not by Lloyds Richfield, but by the State. 
2. It contended that it may only acquire an easement of right of way over the parcels of land pursuant to Republic Act No. 6395, and thus, may only pay an easement fee equivalent to 10% of the market value of the lands to be expropriated.

ISSUES: 

1. Whether Lloyd is entitled to an amount equivalent to the fair market value of its properties expropriated by the National Power Corporation not just a 10% easement fee;
2. Whether the award of just compensation for the limestone deposits shall be granted

HELD: 

1. YES. Here, constructing transmission lines over Lloyds Richfield’s properties impairs the principal purpose for which the parcels of expropriated land were actually devoted: quarrying activities. Consequently, a right-of-way easement will not suffice. Lloyds Richfield is entitled to the full market value of the properties as just compensation, not just an easement fee, for the taking of its properties.

The Constitution mandates the payment of just compensation for the taking of private property for public use. Section 9 of the Bill of Rights provides:

SECTION 9. Private property shall not be taken for public use without just compensation.

Just compensation is “the full and fair equivalent of the property taken from its owner by the expropriator.

“Just” means the compensation given to the owner for the taking of the property must be “real, substantial, full and ample.” In monetary terms, just compensation is the fair market value of the property taken. It is that “sum of money which a person desirous, but not compelled to buy, and an owner, willing, but not compelled to sell, would agree on as a price to be given and received for such property. Expropriation, however, is not limited to the taking of property with the corresponding transfer of title from the landowner to the expropriator. Easements of right of way fall within the purview of expropriation, allowed when the restrictions on the landowner’s property rights are not perpetual or indefinite In such a case, a mere easement fee may suffice.

Here, expropriation by creating an easement of right of way is impossible. Constructing transmission lines over the expropriated properties placed an indefinite and perpetual restriction on Lloyds Richfield’s proprietary rights. This is especially true since Lloyds Richfield has been perpetually prohibited from conducting dynamite blasting and quarrying activities in the properties expropriated, or else the transmission lines would be damaged or completely destroyed, endangering lives and properties. Therefore, the National Power Corporation has no choice but to expropriate the properties in the traditional sense, to take the properties and acquire title, for which it must pay the full market value of the properties as just compensation.

2. Lloyds Richfield, however, is not entitled to just compensation for the limestone deposits in its properties.

Under Article XII, Section 2 of the Constitution, the State owns all minerals found in Philippine soil. While Lloyds Richfield has title to the properties, it does not own the minerals underneath them, as shown by the permits and the Mineral Production Sharing Agreement it had to secure from the government to conduct quarrying activities in its properties. Article 437 of the Civil Code, which provides that the owner of a parcel of land is the owner of its surface and everything under it, is not without limitations. For one, it is a statute that cannot trump a constitutional provision. Article 437 itself provides that it is “subject to special laws and ordinances.” Certainly, the Constitution can be considered a special law, if not the fundamental law, to which all statutes must conform.

In Republic v. Court of Appeals, this Court held that an owner of a parcel of land may even be ousted of ownership of their land should minerals be found underneath it, in which case, they shall be paid just compensation for the taking of the land, not for the taking of the minerals underneath it.

The rule simply reserves to the State all minerals that may be found in public and even private land devoted to “agricultural, industrial, commercial, residential or (for) any purpose other than mining.” Thus, if a person is the owner of agricultural land in which minerals are discovered, his ownership of such land does not give him the right to extract or utilize the said minerals without the permission of the State to which such minerals belong.

… [O]nce minerals are discovered in the land, whatever the use to which it is being devoted at the time, such use may be discontinued by the State to enable it to extract the minerals therein in the exercise of its sovereign prerogative. The land is thus converted to mineral land and may not be used by any private party, including the registered owner thereof, for any other purpose that will impede the mining operations to be undertaken therein. For the loss sustained by such owner, he is of course entitled to just compensation under the Mining Laws or in appropriate expropriation proceedings

G.R. No. 194488. February 11, 2015.

FACTS:

Petitioner Reyes, filed a Complaint before the Regional Trial Court of Malolos, Bulacan, for easement of right of way against respondents, Spouses Valentin. Petitioner alleged that respondents’ 1,500-square-meter property surrounded her property and that it was the only adequate outlet from her property to the highway. A 113-square-meter portion of respondents’ property was also the “point least prejudicial to the [respondents].

The respondents despite demands and willingness to pay the amount, respondents refused to accede to the petitioner’s claims. They contended that the isolation of petitioner’s property was due to her mother’s own act of subdividing the property among her children without regard to the pendency of an agrarian case between her and her tenants. The property chosen by the petitioner as an easement was also the most burdensome for respondents. Respondents pointed to an open space that connected the petitioner’s property to another public road.

The RTC denied the prayer and noted that the proposed right of way would pass through improvements, such as the respondents’ garage, garden, and grotto. The trial court also noted the existence of an irrigation canal that limited access to the public road

ISSUE:

Whether the petitioner has the compulsory easement of right of way over the respondents’ property.

HELD:

NO. Petitioner failed to satisfy the Civil Code requirements for the grant of easement rights

The acts of petitioner’s predecessor-in-interest necessarily affect petitioner’s rights over the property. One of the requirements for the grant of an easement of right of way is that the isolation of the property is not due to the acts of the dominant estate’s owners. Assuming, however, that petitioner or her mother did not cause the isolation of petitioner’s property, petitioner still cannot be granted the easement of right of way over the proposed portion of respondents’ property. This is because she failed to satisfy the requirements for an easement of right of way under the Civil Code. Articles 649 and 650 of the Civil Code provide the requisites of an easement of right of way:

1. An immovable is surrounded by other immovables belonging to other persons, and is without adequate outlet to a public highway;
2. Payment of proper indemnity by the owner of the surrounding immovable;
3. The isolation of the immovable is not due to its owner’s acts; and
4. The proposed easement of right of way is established at the point least prejudicial to the servient estate, and insofar as consistent with this rule, where the distance of the dominant estate to a public highway may be the shortest.

An easement of right of way is a real right. When an easement of right of way is granted to another person, the rights of the property’s owner are limited. An owner may not exercise some of his or her property rights for the benefit of the person who was granted the easement of right of way. Hence, the burden of proof to show the existence of the above conditions is imposed on the person who seeks the easement of right of way. 

Petitioner failed to establish that there was no adequate outlet to the public highway and that the proposed easement was the least prejudicial to respondents’ estate. There is an adequate exit to a public highway. In Dichoso, Jr. v. Marcos, the convenience of the dominant estate’s owner is not the basis for granting an easement of right of way, especially if the owner’s needs may be satisfied without imposing the easement.Based on the Ocular Inspection Report, petitioner’s property had another outlet to the highway. In between her property and the highway or road, however, is an irrigation canal, which can be traversed by constructing a bridge, similar to what was done by the owners of the nearby properties. The outlet referred to in the Ocular Inspection Report may be longer and more inconvenient to petitioner because she will have to traverse other properties and construct a bridge over the irrigation canal before she can reach the road. However, these reasons will not justify the imposition of an easement on respondents’ property because her convenience is not the gauge in determining whether to impose an easement of right of way over another’s property.

Imposing an easement on the part of respondents’ property for petitioner’s benefit would cost respondents not only the value of the property but also the value of respondents’ opportunity to use the property as a garage or a garden with a grotto.

G.R. No. 227917, March 17, 2021

FACTS:

The Fernandez Spouses once owned five contiguous parcels of land in Dagupan City. Two of their properties were located in front of their three other properties. These two front properties provided the other properties sole access to the national highway. In 1980, the Fernandez Spouses annotated on the transfer certificates of title of the front properties an easement of right of way in favor of the back properties. The Fernandez Spouses later obtained a loan from the Philippine National Bank and mortgaged the front properties. When they failed to pay their loan, the bank foreclosed and eventually acquired the front properties. Later on, Spouses Delfin purchased the front properties. The Delfin Spouses refused to recognize the annotated right of way, enclosing the properties to prevent the Fernandez Spouses from accessing the national highway through the front properties.

Fernandez Spouses filed before the Regional Trial Court a Complaint for specific performance, right of way, and damages, arguing that they were entitled to use the right of way to access the national highway.

Delfin Spouses countered that they acted within their rights as the properties’ owners. They claimed that despite the annotations, the right of way was invalid as it was constituted by the Fernandez Spouses for their own sake. They alleged that the easement had already been extinguished when the Philippine National Bank acquired the properties after foreclosure. Besides, they said, the Fernandez Spouses had other ways to access the national highway. They added that they were willing to grant a right of way if they would be indemnified.

ISSUE/S: 

Whether or not a valid easement of right of way was constituted on the front properties formerly owned by the Spouses

HELD:

YES. An easement of right of way in favor of petitioners was validly constituted.

Discussion:

An easement is an encumbrance on a property for the benefit of another property owned by another. It involves a grant to use a portion or aspect of the property, without relinquishing ownership or possession over it. The property on which the easement is imposed, and which will be used by the other, is called the servient estate. The property to which the use is granted is the dominant estate. In an easement of right of way, there is a portion of the servient estate dedicated to the passage of the dominant estate’s owner. It is thus a discontinuous easement, used only in intervals and depending on whether a person needs to pass through another person’s property. In Bogo-Medellin Milling Company, Inc. v. Court of Appeals:

Easements are either continuous or discontinuous according to the manner they are exercised. Thus, an easement is continuous if its use is, or may be, incessant without the intervention of any act of man, like the easement of drainage; and it is discontinuous if it is used at intervals and depends on the act of man, like the easement of right of way. The easement of right of way is considered discontinuous because it is exercised only if a person passes or sets foot on somebody else’s land. The presence of physical or visual signs only classifies an easement into apparent or non-apparent. Thus, a road (which reveals a right of way) and a window (which evidences a right to light and view) are apparent easements, while an easement of not building beyond a certain height is non-apparent.

An easement cannot be constituted if both the dominant estate and the servient estate is owned by only one person. In such an instance, the owner only exercises the right of dominion over their property. However, the easement is created when the property is divided when the ownership of either the dominant or servient estate is transferred to another. 

Article 624 applies in case one person who owns two properties established an apparent sign of an easement between them. When the ownership of either property is transferred to another, the existence of the apparent sign of easement shall be considered as a title over an easement, unless the contrary is provided in the deed of transfer, or if the apparent sign is removed before the deed of transfer’s execution. The created easement is considered accepted and subsisting if no issues were raised against it or against the manner by which it is used. When the new owner made no stipulation contrary to the apparent easement, they are deemed to have acquiesced to its continuation. The easement becomes a burden they willingly accepted

In the case of Spouses Garcia v. Santos: The mode of acquiring an easement under Article 624 is a “legal presumption or apparent sign.” Article 624 finds application in situations wherein two or more estates were previously owned by a singular owner, or even a single estate but with two or more portions being owned by a singular owner. Originally, there is no true easement that exists as there is only one owner. Hence, at the outset, no other owner is imposed with a burden. Subsequently, one estate or a portion of the estate is alienated in favor of another person, wherein, in that estate or portion of the estate, an apparent visible sign of an easement exists. According to Article 624, there arises a title to an easement . . . , even in the absence of any formal act undertaken by the owner of the dominant estate, if this apparent visible sign,… continues to remain and subsist, unless, at the time the ownership of the two estates is divided, (1) the contrary should be provided in the title of conveyance of either of them, or (2) the sign aforesaid should be removed before the execution of the deed.

An easement need not be annotated on the title before it may be acknowledged to exist. Every buyer of a registered land who takes a certificate of title for value and in good faith shall hold the same free of all encumbrances except those noted on said certificate. It has been held, however, that “where the party has knowledge of a prior existing interest that was unregistered at the time he acquired a right to the same land, his knowledge of that prior unregistered interest has the effect of registration as to him.”

Similarly, Article 624 applies in this case. The front properties and the back properties were all previously owned by petitioners, who created an apparent sign of an easement on the front properties when: (1) they used a portion of the front properties to give the back properties access to the national highway; and (2) they had it annotated on the front properties’ titles as an easement of right of way in favor of the back properties. When the front properties were eventually transferred to the Philippine National Bank, the bank did not raise any qualms or stipulated against the easement of right of way or the annotations.57 Thus, when the front properties were sold, respondents’ titles bore the same annotations as those of petitioners

The respondents were aware of the easement as it was annotated on the Philippine National Bank’s titles and on the titles issued to them. They are thus presumed to have been informed that petitioners use a portion of the front properties to access the national highway. Yet, despite this knowledge, they still purchased the properties, with no showing that they made any manifest objection to it at the time of transfer.