Short answer. Only the reversion clause is void. Article 757 provides that a reversion in favor of a third person who was not living at the time of the donation is void, but expressly states it shall not nullify the donation. The gift itself stands; only the invalid reversion clause falls away.
What the law says
Reversion may be validly established in favor of only the donor for any case and circumstances, but not in favor of other persons unless they are all living at the time of the donation. Any reversion stipulated by the donor in favor of a third person in violation of what is provided in the preceding paragraph shall be void, but shall not nullify the donation.
Civil Code, Article 757 — Reversion Of Donated Property. Read the full provision →
Reversion to a third person requires that person to be alive
Article 757 sets the condition your father's clause failed to meet: reversion may be validly established in favor of only the donor for any case and circumstances, but not in favor of other persons unless they are all living at the time of the donation. A donor can always reserve reversion for himself without restriction, but reversion to someone else requires that person to actually be alive when the donation is made. Since the third person named in your father's reversion clause was not alive at that time, the clause does not meet this requirement.
The clause is void, but the donation survives
The article addresses exactly this consequence: any reversion stipulated by the donor in favor of a third person in violation of what is provided in the preceding paragraph shall be void, but shall not nullify the donation. So the invalid reversion clause is severed from the rest of the donation rather than dragging the entire gift down with it. The donee's ownership of the donated property stands on its own, unaffected by the fact that the reversion provision naming a person who was not yet alive cannot be given effect.
Why the law protects the donation from this specific defect
The reversion clause and the donation itself serve different purposes: the donation transfers the property to the donee, while the reversion clause was meant to specify what would happen to that property under certain future conditions. Because the flaw here lies entirely in the reversion provision's failure to meet the living-person requirement, and not in anything wrong with the donation's essential elements, the law confines the defect to the clause that actually violates the rule, preserving the donee's rights over the gift itself.
What this means for the property now
The donee holds the donated property free of the void reversion clause, since that provision produces no legal effect at all. Nobody can rely on the invalid reversion to claim the property should revert to the named third person or to that person's heirs, because the clause never validly existed under Article 757. The donation should be treated as a straightforward, unconditional transfer to the donee, with only the defective reversion stipulation removed from the picture.