ZAMBOANGA V PLAGATA CASE DIGEST

G.R. No. 148433 : September 30, 2008

Petitioners: ZAMBOANGA BARTER TRADERS KILUSANG BAYAN, INC. represented by its

President, ATTY. HASAN G. ALAM
Respondent: HON. JULIUS RHETT J. PLAGATA, in his capacity as Executive Labor Arbiter of
NLRC-RAB No. IX, SHERIFF DANILO P. TEJADA of NLRC-RAB No. IX and
TEOPISTO MENDOZA
Ponente: CHICO-NAZARIO, J.

Facts:

On 17 June 1981, ZBTKBI, thru its President, Atty. Hassan G. Alam, and the Republic of the
Philippines, represented by Maj. Gen. Delfin C. Castro entered into a Deed of Donation whereby
ZBTKBI donated to the Republic a parcel of land situated in the Barrio of Canelar, City of Zamboanga,
containing an area of 13,643 square meters, more or less. The Republic accepted the donation which
contained the following conditions:

1) That upon the effectivity or acceptance hereof the DONEE shall, thru the authorized
agency/ministry, construct a P5 Million Barter Trade market building at the afore-described
parcel of land;
2) That the aforesaid Barter Trade Market building shall accommodate at least 1,000 stalls, the
allocation of which shall be determined by the Executive Committee for Barter Trade in
coordination with the Officers and Board of Directors the Zamboanga Barter Traders' Kilusang
Bayan, Inc., provided, however, that each member of the DONOR shall be given priority;
3) That the said Barter Trade Market building to be constructed as above-stated, shall be to the strict
exclusion of any other building for barter trading in Zamboanga City, Philippines;
4) That in the event barter trading shall be phased out, prohibited, or suspended for more than one
(1) year in Zamboanga City, Philippines, the afore-described parcel of land shall revert back to
the DONOR without need of any further formality or documentation, and the DONOR shall have
the first option to purchase the building and improvements thereon.
5) That the DONEE hereby accepts this donation made in its favor by the DONOR, together with
the conditions therein provided.

Pursuant to condition No. 1 of the Deed of Donation, the Government and Regional Office No.
IX of the Department of Public Works and Highways (DPWH) constructed a Barter Trade Market
Building worth P5,000,000.00 at the said Lot No. 6. The building was completed on 30 March 1983 and
was occupied by members of ZBTKBI, as well as by other persons engaged in barter trade.

On 17 June 1988, the Office of the President issued Memorandum Circular No. 1 which totally
phased out the Zamboanga City barter trade area effective 1 October 1988.

Petitioner argues effective October 1, 1988, the donated property was no longer owned by the
Republic of the Philippines having violated the condition number 4. Following the condition contained in
the Deed of Donation, the donated land shall revert to the petitioner without further formality or
documentation. It follows that upon the phase-out of barter trade, petitioner again became the owner of
the subject land. As found by the Court of Appeals, Atty. Hasan G. Alam subscribed to the legal reality
that ZBTKBI was the owner of the subject land when he wrote Lt. Gen. Ruperto A. Ambil, Jr. of the
Southern Command on 6 February 1996, requesting the return of the original TCT covering the property.
It should be clear that reversion applied only to the land and not to the building and improvements made
by the Republic on the land worth P5,000,000.00.

Issue:

Whether or not a stipulation of automatic reversion in a deed of donation valid

Held:

The deed of donation contains a stipulation that allows automatic reversion. Such stipulation, not
being contrary to law, morals, good customs, public order or public policy, is valid and binding on the
parties to the donation.

As held in Dolar v. Barangay Lublub (Now P.D. Monfort North) Municipality of Dumangas,
citing Roman Catholic Archbishop of Manila v. Court of Appeals70

When a deed of donation expressly provides for automatic revocation and reversion of the
property donated, the rules on contract and the general rules on prescription should apply, and not Article
764 of the Civil Code. Since Article 1306 of said Code authorizes the parties to a contract to establish
such stipulations, not contrary to law, public order or public policy, we are of the opinion that, at the very
least, that stipulation of the parties providing for automatic revocation of the deed of donation, without
prior judicial action for that purpose, is valid subject to the determination of the propriety of the rescission
sought. Where such propriety is sustained, the decision of the court will be merely declaratory of the
revocation, but it is not in itself the revocatory act.

The automatic reversion of the subject land to the donor upon phase out of barter trading in
Zamboanga City cannot be doubted. Said automatic reversion cannot be averted, merely because
petitioner-donor has not yet exercised its option to purchase the buildings and improvements made and
introduced on the land by the Republic; or because the Republic has not yet sold the same to other
interested buyers. Otherwise, there would be gross violation of the clear import of the conditions set forth
in the deed of donation.