MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY, PETITIONER, VS. LAPU-LAPU CITY, RESPONDENT.

Mactan-Cebu International Airport Authority versus Lapu-Lapu City

The Case

This is a petition for review on certiorari brought by the Mactan-Cebu International Airport Authority against the City of Lapu-Lapu, asking the Supreme Court to overturn the ruling of the Court of Appeals that upheld the City's ownership of a parcel of land known as Lot No. 4726-A. The land had been donated to the City in 1935 by the spouses Marcos and Basilisa Seno on the express condition that it be used exclusively and forever for school purposes only. The case matters because it fixes the standard for revoking a donation for breach of condition: the noncompliance must be substantial and fundamental, not slight or casual, and a donee cannot be penalized for a nonfulfillment caused by the very party who complains of it.

Procedural History

The heirs of the spouses Seno sued for recovery of the land before the Regional Trial Court of Lapu-Lapu City. In its first decision, the trial court held that the City had violated the condition when it demolished Ibo Elementary School and failed to use the lot exclusively for school purposes. On reconsideration, however, the trial court reversed itself, upheld the donation as valid and subsisting, and declared the City the rightful owner of Lot No. 4726-A, while awarding four-ninths of Lot No. 4726-B to the excluded heirs.

On appeal, the Court of Appeals affirmed the validity of the donation in favor of the City, reasoning that the transfer of the school was due to the increase in student population and did not amount to abandonment. It modified the ruling only to adjudge the airport authority as absolute owner of Lot No. 4726-B. The heirs then went up to the Supreme Court, which denied their petition for failure to show reversible error; an entry of judgment followed, making that denial final and executory. The Court of Appeals then declared the heirs' motion for reconsideration moot and denied the airport authority's motion for partial reconsideration. Aggrieved, the airport authority filed the present petition for review on certiorari under Rule 45.

Facts

The spouses Marcos and Basilisa Seno owned Lot No. 4726, which was later subdivided into Lot Nos. 4726-A and 4726-B. In 1935, the spouses donated Lot No. 4726-A to the City of Lapu-Lapu, subject to the condition that the property shall be used exclusively and forever for school purposes only. Pursuant to that condition, Ibo Elementary School was built on the land. The school was later demolished and transferred to another location because the student population kept growing.

In 1958, some of the heirs of the spouses Seno executed an extrajudicial settlement and sale covering the entire Lot No. 4726, including Lot No. 4726-A, in favor of the Mactan-Cebu International Airport Authority. Years later, the heirs sued to recover the land, claiming that the sale to the airport authority was void because the lot had already been donated to the City, and that ownership reverted to them when the City failed to comply with the condition.

The airport authority agreed that the City's failure triggered reversion to the heirs, but insisted that ownership had then passed to it through the extrajudicial settlement and sale. The City maintained that the donation remained valid and subsisting, and that it continued to intend to use the property for educational purposes. The records showed that the City never abandoned the property or repudiated the donor's intent, and that its present inability to use the lot for school purposes was due in part to the airport authority's own occupation of the property.

Issues

• Whether or not the Court of Appeals erred in upholding the ownership of Lapu-Lapu City over Lot No. 4726-A.
• Whether or not the City's failure to maintain a school building on the donated lot amounted to a substantial and fundamental breach justifying revocation of the donation.
• Whether or not the airport authority may invoke the nonfulfillment of the condition when that nonfulfillment was caused or materially contributed to by its own occupation of the property.

Applicable Provisions

The decision applies the rule on rescission for breach, as discussed through Article 1191 of the Civil Code, which provides:

The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.

The Court uses this rule, together with Article 764 on revocation of donations, to measure the nature of the breach that will justify rescission.

The decision also relies on the principle expressed in the maxim nemo dat quod non habet, meaning no one can give what one does not have, which provides:

Nemo dat quod non habet.

This principle defeats the airport authority's claim, because the heirs had nothing to sell if no right of reversion had accrued to them.

Ruling

On the first issue, the Court held that the Court of Appeals did not err. To justify the revocation of a donation for breach of a condition, the noncompliance must be substantial and fundamental, not merely slight or casual, taking into account the purpose of the donation and the parties' intent. The Court quoted the governing standard:

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.

On the second issue, the Court found that the airport authority failed to establish such a breach. The records did not show that the City abandoned the property or repudiated the donor's intent. On the contrary, the City consistently maintained that the lot remained intended for school use, and the demolition of the school building was prompted not by abandonment but by the practical necessity of transferring the school to accommodate a growing student population. The Court noted the letter of the Schools Division Superintendent expressly acknowledging the prior use of the property as the site of Ibo Elementary School and the plan to continue utilizing it for school purposes. The deed of donation fixed no time frame for building the school, so the City was entitled to sufficient time to comply.

On the third issue, the Court held that a party cannot invoke the nonfulfillment of a condition where such nonfulfillment was caused or materially contributed to by its own acts. The City could not presently comply because the lot was occupied by the airport authority itself. To rule otherwise would allow the petitioner to profit from a circumstance that it itself helped create.

Finally, without a valid revocation of the donation, no right of reversion accrued to the heirs. Consequently, the airport authority could not derive any right from the extrajudicial settlement and sale the heirs executed, for no one can give what one does not have.

Doctrine

A donation may be revoked for breach of an express condition only where the noncompliance is substantial and fundamental, not merely slight or casual, judged by the purpose of the donation and the parties' intent. The absence of a fixed period in the deed entitles the donee to sufficient time to comply. A party cannot invoke the nonfulfillment of a condition where that nonfulfillment was caused or materially contributed to by its own acts. And without a valid revocation, no right of reversion accrues to the donor or the heirs, so any subsequent sale by them conveys nothing, under the maxim nemo dat quod non habet, no one can give what one does not have.

Disposition

The petition was denied; the Court of Appeals decision and resolution were affirmed, the deed of donation over Lot No. 4726-A was declared valid and subsisting for want of a substantial breach, and Lapu-Lapu City was declared the lawful owner of the lot.

Remember This

Memorize the line: rescission of a donation lies only for a breach so substantial and fundamental as to defeat the object of the parties, and a party cannot invoke a nonfulfillment it itself caused. Examiners use this case on the requisites for revoking a donation with a condition, on the effect of the absence of a period, and on the application of nemo dat quod non habet to a sale by heirs who had no right of reversion.