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MODES OF ACQUIRING OWNERSHIP XXV

A. Theory of Mode and Title


95. Acap v. Court of Appeals (251 SCRA 30) 169-171
G.R. No. 118114 December 7, 1995
TEODORO ACAP, Petitioner, v. COURT OF APPEALS and EDY DE LOS
REYES,Respondents.
PADILLA, J.:
This is a petition for review on certiorari of the decision 1of the Court of Appeals, 2nd
Division, in CA-G.R. No. 36177, which affirmed the decision 2of the Regional Trial Court of
Himamaylan, Negros Occidental holding that private respondent Edy de los Reyes had
acquired ownership of Lot No. 1130 of the Cadastral Survey of Hinigaran, Negros Occidental
based on a document entitled "Declaration of Heirship and Waiver of Rights", and ordering
the dispossession of petitioner as leasehold tenant of the land for failure to pay rentals.
The facts of the case are as follows:
The title to Lot No. 1130 of the Cadastral Survey of Hinigaran, Negros Occidental was
evidenced by OCT No. R-12179. The lot has an area of 13,720 sq. meters. The title was
issued and is registered in the name of spouses Santiago Vasquez and Lorenza Oruma. After
both spouses died, their only son Felixberto inherited the lot. In 1975, Felixberto executed a
duly notarized document entitled "Declaration of Heirship and Deed of Absolute Sale" in
favor of Cosme Pido.
The evidence before the court a quo established that since 1960, petitioner Teodoro Acap
had been the tenant of a portion of the said land, covering an area of nine thousand five
hundred (9,500) meters. When ownership was transferred in 1975 by Felixberto to Cosme
Pido, Acap continued to be the registered tenant thereof and religiously paid his leasehold
rentals to Pido and thereafter, upon Pido's death, to his widow Laurenciana.
The controversy began when Pido died intestate and on 27 November 1981, his surviving
heirs executed a notarized document denominated as "Declaration of Heirship and Waiver of
Rights of Lot No. 1130 Hinigaran Cadastre," wherein they declared; to quote its pertinent
portions, that:
. . . Cosme Pido died in the Municipality of Hinigaran, Negros Occidental, he died intestate
and without any known debts and obligations which the said parcel of land is (sic) held
liable.
That Cosme Pido was survived by his/her legitimate heirs, namely: LAURENCIANA PIDO,
wife, ELY, ERVIN, ELMER, and ELECHOR all surnamed PIDO; children;
That invoking the provision of Section 1, Rule 74 of the Rules of Court, the above-mentioned
heirs do hereby declare unto [sic] ourselves the only heirs of the late Cosme Pido and that
we hereby adjudicate unto ourselves the above-mentioned parcel of land in equal shares.

Now, therefore, We LAURENCIANA 3, ELY, ELMER, ERVIN and ELECHOR all surnamed
PIDO, do hereby waive, quitclaim all our rights, interests and participation over the said
parcel of land in favor of EDY DE LOS REYES, of legal age, (f)ilipino, married to VIRGINIA
DE LOS REYES, and resident of Hinigaran, Negros Occidental, Philippines. . . . 4(Emphasis
supplied)
The document was signed by all of Pido's heirs. Private respondent Edy de los Reyes did not
sign said document.
It will be noted that at the time of Cosme Pido's death, title to the property continued to be
registered in the name of the Vasquez spouses. Upon obtaining the Declaration of Heirship
with Waiver of Rights in his favor, private respondent Edy de los Reyes filed the same with
the Registry of Deeds as part of a notice of an adverse claim against the original certificate
of title.
Thereafter, private respondent sought for petitioner (Acap) to personally inform him that he
(Edy) had become the new owner of the land and that the lease rentals thereon should be
paid to him. Private respondent further alleged that he and petitioner entered into an oral
lease agreement wherein petitioner agreed to pay ten (10) cavans of palay per annumas
lease rental. In 1982, petitioner allegedly complied with said obligation. In 1983, however,
petitioner refused to pay any further lease rentals on the land, prompting private
respondent to seek the assistance of the then Ministry of Agrarian Reform (MAR) in
Hinigaran, Negros Occidental. The MAR invited petitioner to a conference scheduled on 13
October 1983. Petitioner did not attend the conference but sent his wife instead to the
conference. During the meeting, an officer of the Ministry informed Acap's wife about
private respondent's ownership of the said land but she stated that she and her husband
(Teodoro) did not recognize private respondent's claim of ownership over the land.
On 28 April 1988, after the lapse of four (4) years, private respondent filed a complaint for
recovery of possession and damages against petitioner, alleging in the main that as his
leasehold tenant, petitioner refused and failed to pay the agreed annual rental of ten (10)
cavans of palay despite repeated demands.
During the trial before the court a quo, petitioner reiterated his refusal to recognize private
respondent's ownership over the subject land. He averred that he continues to recognize
Cosme Pido as the owner of the said land, and having been a registered tenant therein since
1960, he never reneged on his rental obligations. When Pido died, he continued to pay
rentals to Pido's widow. When the latter left for abroad, she instructed him to stay in the
landholding and to pay the accumulated rentals upon her demand or return from abroad.
Petitioner further claimed before the trial court that he had no knowledge about any transfer
or sale of the lot to private respondent in 1981 and even the following year after
Laurenciana's departure for abroad. He denied having entered into a verbal lease tenancy
contract with private respondent and that assuming that the said lot was indeed sold to
private respondent without his knowledge, R.A. 3844, as amended, grants him the right to
redeem the same at a reasonable price. Petitioner also bewailed private respondent's
ejectment action as a violation of his right to security of tenure under P.D. 27.
On 20 August 1991, the lower court rendered a decision in favor of private respondent, the
dispositive part of which reads:

WHEREFORE, premises considered, the Court renders judgment in favor of the plaintiff, Edy
de los Reyes, and against the defendant, Teodoro Acap, ordering the following, to wit:
1. Declaring forfeiture of defendant's preferred right to issuance of a Certificate of Land
Transfer under Presidential Decree No. 27 and his farmholdings;
2. Ordering the defendant Teodoro Acap to deliver possession of said farm to plaintiff, and;
3. Ordering the defendant to pay P5,000.00 as attorney's fees, the sum of P1,000.00 as
expenses of litigation and the amount of P10,000.00 as actual damages.
In arriving at the above-mentioned judgment, the trial court stated that the evidence had
established that the subject land was "sold" by the heirs of Cosme Pido to private
respondent. This is clear from the following disquisitions contained in the trial court's six (6)
page decision:
There is no doubt that defendant is a registered tenant of Cosme Pido. However, when the
latter died their tenancy relations changed since ownership of said land was passed on to his
heirs who, by executing a Deed of Sale, which defendant admitted in his affidavit, likewise
passed on their ownership of Lot 1130 to herein plaintiff (private respondent). As owner
hereof, plaintiff has the right to demand payment of rental and the tenant is obligated to
pay rentals due from the time demand is made. . . . 6
xxx xxx xxx
Certainly, the sale of the Pido family of Lot 1130 to herein plaintiff does not of itself
extinguish the relationship. There was only a change of the personality of the lessor in the
person of herein plaintiff Edy de los Reyes who being the purchaser or transferee, assumes
the rights and obligations of the former landowner to the tenant Teodoro Acap, herein
defendant.
Aggrieved, petitioner appealed to the Court of Appeals, imputing error to the lower court
when it ruled that private respondent acquired ownership of Lot No. 1130 and that he, as
tenant, should pay rentals to private respondent and that failing to pay the same from 1983
to 1987, his right to a certificate of land transfer under P.D. 27 was deemed forfeited.
The Court of Appeals brushed aside petitioner's argument that the Declaration of Heirship
and Waiver of Rights (Exhibit "D"), the document relied upon by private respondent to prove
his ownership to the lot, was excluded by the lower court in its order dated 27 August 1990.
The order indeed noted that the document was not identified by Cosme Pido's heirs and was
not registered with the Registry of Deeds of Negros Occidental. According to respondent
court, however, since the Declaration of Heirship and Waiver of Rights appears to have been
duly notarized, no further proof of its due execution was necessary. Like the trial court,
respondent court was also convinced that the said document stands as prima facie proof of
appellee's (private respondent's) ownership of the land in dispute.
With respect to its non-registration, respondent court noted that petitioner had actual
knowledge of the subject sale of the land in dispute to private respondent because as early
as 1983, he (petitioner) already knew of private respondent's claim over the said land but
which he thereafter denied, and that in 1982, he (petitioner) actually paid rent to private
respondent. Otherwise stated, respondent court considered this fact of rental payment in

1982 as estoppel on petitioner's part to thereafter refute private respondent's claim of


ownership over the said land. Under these circumstances, respondent court ruled that
indeed there was deliberate refusal by petitioner to pay rent for a continued period of five
years that merited forfeiture of his otherwise preferred right to the issuance of a certificate
of land transfer.chanroblesvirtualawlibrarychanrobles virtual law library
In the present petition, petitioner impugns the decision of the Court of Appeals as not in
accord with the law and evidence when it rules that private respondent acquired ownership
of Lot No. 1130 through the aforementioned Declaration of Heirship and Waiver of
Rights.chanroblesvirtualawlibrarychanrobles virtual law library
Hence, the issues to be resolved presently are the following:
1. WHETHER OR NOT THE SUBJECT DECLARATION OF HEIRSHIP AND WAIVER OF RIGHTS
IS A RECOGNIZED MODE OF ACQUIRING OWNERSHIP BY PRIVATE RESPONDENT OVER THE
LOT IN QUESTION.chanroblesvirtualawlibrarychanrobles virtual law library
2. WHETHER OR NOT THE SAID DOCUMENT CAN BE CONSIDERED A DEED OF SALE IN
FAVOR OF PRIVATE RESPONDENT OF THE LOT IN QUESTION.
Petitioner argues that the Regional Trial Court, in its order dated 7 August 1990, explicitly
excluded the document marked as Exhibit "D" (Declaration of Heirship, etc.) as private
respondent's evidence because it was not registered with the Registry of Deeds and was not
identified by anyone of the heirs of Cosme Pido. The Court of Appeals, however, held the
same to be admissible, it being a notarized document, hence, a prima facie proof of private
respondents' ownership of the lot to which it refers.chanroblesvirtualawlibrarychanrobles
virtual law library
Petitioner points out that the Declaration of Heirship and Waiver of Rights is not one of the
recognized modes of acquiring ownership under Article 712 of the Civil Code. Neither can
the same be considered a deed of sale so as to transfer ownership of the land to private
respondent because no consideration is stated in the contract (assuming it is a contract or
deed of sale).chanroblesvirtualawlibrarychanrobles virtual law library
Private respondent defends the decision of respondent Court of Appeals as in accord with
the evidence and the law. He posits that while it may indeed be true that the trial court
excluded his Exhibit "D" which is the Declaration of Heirship and Waiver of Rights as part of
his evidence, the trial court declared him nonetheless owner of the subject lot based on
other evidence adduced during the trial, namely, the notice of adverse claim (Exhibit "E")
duly registered by him with the Registry of Deeds, which contains the questioned
Declaration of Heirship and Waiver of Rights as an integral part
thereof.chanroblesvirtualawlibrarychanrobles virtual law library
We find the petition impressed with merit.chanroblesvirtualawlibrarychanrobles virtual law
library
In the first place, an asserted right or claim to ownership or a real right over a thing arising
from a juridical act, however justified, is not per se sufficient to give rise to ownership over
the res. That right or title must be completed by fulfilling certain conditions imposed by law.
Hence, ownership and real rights are acquired only pursuant to a legal mode or process.

While title is the juridical justification, mode is the actual process of acquisition or transfer of
ownership over a thing in question. 8
Under Article 712 of the Civil Code, the modes of acquiring ownership are
generally classified into two (2) classes, namely, the original mode (i.e., through
occupation, acquisitive prescription, law or intellectual creation) and
the derivative mode (i.e., through succession mortis causa or tradition as a result
of certain contracts, such as sale, barter, donation, assignment or
mutuum).chanroblesvirtualawlibrarychanrobles virtual law library
In the case at bench, the trial court was obviously confused as to the nature and effect of
the Declaration of Heirship and Waiver of Rights, equating the same with a contract (deed)
of sale. They are not the same.
In a Contract of Sale, one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other party to pay a price certain
in money or its equivalent. 9
Upon the other hand, a declaration of heirship and waiver of rights operates as a public
instrument when filed with the Registry of Deeds whereby the intestate heirs adjudicate and
divide the estate left by the decedent among themselves as they see fit. It is in effect an
extrajudicial settlement between the heirs under Rule 74 of the Rules of Court. 10
Hence, there is a marked difference between a sale of hereditary rights and a waiver of
hereditary rights. The first presumes the existence of a contract or deed of sale between the
parties. 11 The second is, technically speaking, a mode of extinction of ownership where
there is an abdication or intentional relinquishment of a known right with knowledge of its
existence and intention to relinquish it, in favor of other persons who are co-heirs in the
succession. 12 Private respondent, being then a stranger to the succession of Cosme Pido,
cannot conclusively claim ownership over the subject lot on the sole basis of the waiver
document which neither recites the elements of either a sale, 13 or a donation, 14or any other
derivative mode of acquiring ownership.chanroblesvirtualawlibrarychanrobles virtual law
library
Quite surprisingly, both the trial court and public respondent Court of Appeals concluded
that a "sale" transpired between Cosme Pido's heirs and private respondent and that
petitioner acquired actual knowledge of said sale when he was summoned by the Ministry of
Agrarian Reform to discuss private respondent's claim over the lot in question. This
conclusion has no basis both in fact and in law.chanroblesvirtualawlibrarychanrobles virtual
law library
On record, Exhibit "D", which is the "Declaration of Heirship and Waiver of Rights"
was excluded by the trial court in its order dated 27 August 1990 because the document
was neither registered with the Registry of Deeds nor identified by the heirs of Cosme Pido.
There is no showing that private respondent had the same document attached to or made
part of the record. What the trial court admitted was Annex "E", a notice of adverse claim
filed with the Registry of Deeds which contained the Declaration of Heirship with Waiver of
rights and was annotated at the back of the Original Certificate of Title to the land in
question.chanroblesvirtualawlibrarychanrobles virtual law library
A notice of adverse claim, by its nature, does not however prove private respondent's
ownership over the tenanted lot. "A notice of adverse claim is nothing but a notice of a claim

adverse to the registered owner, the validity of which is yet to be established in court at
some future date, and is no better than a notice of lis pendens which is a notice of a case
already pending in court." 15
It is to be noted that while the existence of said adverse claim was duly proven, there is no
evidence whatsoever that a deed of sale was executed between Cosme Pido's heirs and
private respondent transferring the rights of Pido's heirs to the land in favor of private
respondent. Private respondent's right or interest therefore in the tenanted lot remains an
adverse claim which cannot by itself be sufficient to cancel the OCT to the land and title the
same in private respondent's name.
Consequently, while the transaction between Pido's heirs and private respondent may be
binding on both parties, the right of petitioner as a registered tenant to the land cannot be
perfunctorily forfeited on a mere allegation of private respondent's ownership without the
corresponding proof thereof.
Petitioner had been a registered tenant in the subject land since 1960 and religiously paid
lease rentals thereon. In his mind, he continued to be the registered tenant of Cosme Pido
and his family (after Pido's death), even if in 1982, private respondent allegedly informed
petitioner that he had become the new owner of the
land.chanroblesvirtualawlibrarychanrobles virtual law library
Under the circumstances, petitioner may have, in good faith, assumed such statement of
private respondent to be true and may have in fact delivered 10 cavans of palay as annual
rental for 1982 to private respondent. But in 1983, it is clear that petitioner had misgivings
over private respondent's claim of ownership over the said land because in the October
1983 MAR conference, his wife Laurenciana categorically denied all of private respondent's
allegations. In fact, petitioner even secured a certificate from the MAR dated 9 May 1988 to
the effect that he continued to be the registered tenant of Cosme Pido and not of private
respondent. The reason is that private respondent never registered the Declaration of
Heirship with Waiver of Rights with the Registry of Deeds or with the MAR. Instead, he
(private respondent) sought to do indirectly what could not be done directly, i.e., file
a notice of adverse claim on the said lot to establish ownership
thereover.chanroblesvirtualawlibrarychanrobles virtual law library
It stands to reason, therefore, to hold that there was no unjustified or deliberate refusal by
petitioner to pay the lease rentals or amortizations to the landowner/agricultural lessor
which, in this case, private respondent failed to establish in his favor by clear and convincing
evidence. 16
Consequently, the sanction of forfeiture of his preferred right to be issued a Certificate of
Land Transfer under P.D. 27 and to the possession of his farmholdings should not be applied
against petitioners, since private respondent has not established a cause of action for
recovery of possession against petitioner.chanroblesvirtualawlibrarychanrobles virtual law
library
WHEREFORE, premises considered, the Court hereby GRANTS the petition and the decision
of the Court of Appeals dated 1 May 1994 which affirmed the decision of the RTC of
Himamaylan, Negros Occidental dated 20 August 1991 is hereby SET ASIDE. The private
respondent's complaint for recovery of possession and damages against petitioner Acap is
hereby DISMISSED for failure to properly state a cause of action, without prejudice to
private respondent taking the proper legal steps to establish the legal mode by which he

claims to have acquired ownership of the land in


question.chanroblesvirtualawlibrarychanrobles virtual law library
SO ORDERED.
B. Donation XXVI
96. De Luna v. Abrigo (181 SCRA 150) 172 173
G.R. No. L-57455 January 18, 1990
EVELYN DE LUNA, ROSALINA DE LUNA, PRUDENCIO DE LUNA, JR., WILLARD DE
LUNA, ANTONIO DE LUNA, and JOSELITO DE LUNA, Petitioners, vs. HON. SOFRONIO
F. ABRIGO, Presiding Judge of the Court of First Instance of Quezon, Branch IX,
and LUZONIAN UNIVERSITY FOUNDATION, INC., Respondents.
Milberto B. Zurbano for petitioners.chanrobles virtual law library
Joselito E. Talabong for private respondent.
MEDIALDEA, J.:
This is a petition for review on certiorari of the Order dated July 7, 1981 of respondent
judge Sofronio F. Abrigo of the Court of First Instance of Quezon, Branch IX in Civil Case No.
8624 dismissing the complaint of petitioners on the ground of prescription of
action.chanroblesvirtualawlibrarychanrobles virtual law library
The antecedent facts are as follows:chanrobles virtual law library
On January 24, 1965, Prudencio de Luna donated a portion of 7,500 square meters of Lot
No. 3707 of the Cadastral Survey of Lucena covered by Transfer Certificate of Title No. 15775 to the Luzonian Colleges, Inc., (now Luzonian University Foundation, Inc., herein
referred to as the foundation). The donation, embodied in a Deed of Donation Intervivos
(Annex "A" of Petition) was subject to certain terms and conditions and provided for the
automatic reversion to the donor of the donated property in case of violation or noncompliance (pars. 7 and 10 of Annex "A", p. 20, Rollo). The foundation failed to comply with
the conditions of the donation. On April 9, 1971, Prudencio de Luna "revived" the said
donation in favor of the foundation, in a document entitled "Revival of Donation Intervivos"
(Annex "B" of Petition) subject to terms and conditions which among others, required:
xxx xxx xxxchanrobles virtual law library
3. That the DONEE shall construct at its own expense a Chapel, a Nursery and Kindergarten
School, to be named after St. Veronica, and other constructions and Accessories shall be
constructed on the land herein being donated strictly in accordance with the plans and
specifications prepared by the O.R. Quinto & Associates and made part of this donation;
provided that the flooring of the Altar and parts of the Chapel shall be of granoletic
marble.chanroblesvirtualawlibrarychanrobles virtual law library
4. That the construction of the Chapel, Nursery and Kindergarten School shall start
immediately and must be at least SEVENTY (70) PER CENTUM finished by the end of THREE
(3) YEARS from the date hereof, however, the whole project as drawn in the plans and

specifications made parts of this donation must be completed within FIVE (5) YEARS from
the date hereon, unless extensions are granted by the DONOR in writing;chanrobles virtual
law library
. . . . (p. 23, Rollo)
As in the original deed of donation, the "Revival of Donation Intenrivos" also provided for
the automatic reversion to the donor of the donated area in case of violation of the
conditions thereof, couched in the following terms:
xxx xxx xxx.chanroblesvirtualawlibrarychanrobles virtual law library
11. That violation of any of the conditions herein provided shall cause the automatic
reversion of the donated area to the donor, his heirs, assigns and representatives, without
the need of executing any other document for that purpose and without obligation whatever
on the part of the DONOR. (p. 24, Rollo).
The foundation, through its president, accepted the donation in the same document, subject
to all the terms and conditions stated in the donation (p. 24, Rollo). The donation was
registered and annotated on April 15, 1971 in the memorandum of encumbrances as Entry
No. 17939 of Transfer Certificate of Title No. T-5775 (p.
15, Rollo).chanroblesvirtualawlibrarychanrobles virtual law library
On August 3, 1971, Prudencio de Luna and the foundation executed a 'Deed of Segregation"
(Annex "C" of Petition) whereby the area donated which is now known as Lot No. 3707-B of
Subdivision Plan Psd-40392 was adjudicated to the foundation. As a result, transfer
certificate of title No. T-16152 was issued in the name of the foundation. The remaining
portion known as Lot No. 3707-A was retained by the donor. (p.
16, Rollo).chanroblesvirtualawlibrarychanrobles virtual law library
On September 23, 1980, herein petitioners, Evelyn, Rosalina, Prudencio, Jr., Willard, Antonio
and Joselito, all surnamed de Luna, who claim to be the children and only heirs of the late
Prudencio de Luna who died on August 18, 1980, filed a complaint (pp. 14-17, Rollo) with
the Regional Trial Court of Quezon alleging that the terms and conditions of the donation
were not complied with by the foundation. Among others, it prayed for the cancellation of
the donation and the reversion of the donated land to the heirs. The complaint was
docketed as Civil Case No. 8624.chanroblesvirtualawlibrarychanrobles virtual law library
In its answer (pp. 29-36, Rollo), respondent foundation claimed that it had partially and
substantially complied with the conditions of the donation and that the donor has granted
the foundation an indefinite extension of time to complete the construction of the chapel. It
also invoked the affirmative defense of prescription of action and prayed for the dismissal of
the complaint.chanroblesvirtualawlibrarychanrobles virtual law library
During the pre-trial of the case, the foundation moved for a preliminary hearing of its
affirmative defense of prescription of action which was opposed by the plaintiffs. After the
parties have filed their respective written motions, oppositions and memoranda, an Order
(pp., 40-43, Rollo) dated July 7, 1981 was issued dismissing the complaint. The dispositive
portion of the Order states:

In view of the foregoing considerations, this Court finds the motion to dismiss deemed filed
by the defendant on the ground of prescription to be well-taken and the same is hereby
GRANTED.chanroblesvirtualawlibrarychanrobles virtual law library
WHEREFORE, the instant complaint is hereby ordered
DISMISSED.chanroblesvirtualawlibrarychanrobles virtual law library
No pronouncement as to costs.chanroblesvirtualawlibrarychanrobles virtual law library
SO ORDERED. (pp. 42-43, Rollo)
No motion for reconsideration was filed by petitioners.chanroblesvirtualawlibrarychanrobles
virtual law library
On July 22, 1981, petitioners brought the instant petition for review with the following
assignments of error:
I. THE LOWER COURT ERRED IN HOLDING THAT THE DONEE'S CONSENT TO THE
REVOCATION OF A DONATION TO BE VALID MUST BE GIVEN SUBSEQUENT TO THE
EFFECTIVITY OF THE DONATION OR VIOLATION OF (THE) ANY OF THE CONDITIONS
IMPOSED THEREIN.chanroblesvirtualawlibrarychanrobles virtual law library
II. THE LOWER COURT ERRED IN TREATING THE COMPLAINT AS ONE FOR JUDICIAL
DECREE OF REVOCATION OF THE DONATION IN QUESTION AS CONTEMPLATED IN ARTICLE
764 OF THE CIVIL CODE OF THE PHILIPPINES AND WHICH PRESCRIBES IN FOUR (4) YEARS
AND IN NOT CONSIDERING IT AS AN ACTION TO ENFORCE A WRITTEN CONTRACT WHICH
PRESCRIBES IN TEN (10) YEARS AS PROVIDED IN ARTICLE 1144, HENCE, THE LOWER
COURT ERRED IN DISMISSING THE COMPLAINT.chanroblesvirtualawlibrarychanrobles virtual
law library
III. THE LOWER COURT ERRED IN NOT RENDERING JUDGMENT ON THE MERITS BY WAY OF
JUDGMENT ON THE PLEADINGS. (pp. 1-2, Petitioner's Brief)
We gave due course to the petition on August 3, 1981 (p. 45, Rollo). After the parties'
submission of their respective briefs, the Court resolved to consider the petition submitted
for decision on January 27, 1982 (p. 62, Rollo).chanroblesvirtualawlibrarychanrobles virtual
law library
The assailed order of the trial court stated that revocation (of a donation) will be effective
only either upon court judgment or upon consent of the donee as held in the case of Parks
v. Province of Tarlac, No. 24190, July 13, 1926, 49 Phil. 143. The trial court dismissed the
claim of petitioners that the stipulation in the donation providing for revocation in case of
non-compliance of conditions in the donation is tantamount to the consent of the donee,
opining that the consent contemplated by law should be such consent given by the
donee subsequent to the effectivity of the donation or violation of the conditions imposed
therein. The trial court further held that, far from consenting to the revocation, the donee
claimed that it had already substantially complied with the conditions of the donation by
introducing improvements in the property donated valued at more than the amount of the
donated land. In view thereof, a judicial decree revoking the subject donation is necessary.
Accordingly, under Article 764 of the New Civil Code, actions to revoke a donation on the
ground of non-compliance with any of the conditions of the donation shall prescribe in four

years counted from such non-compliance. In the instant case, the four-year period for filing
the complaint for revocation commenced on April 9, 1976 and expired on April 9, 1980.
Since the complaint was brought on September 23, 1980 or more than five (5) months
beyond the prescriptive period, it was already barred by
prescription.chanroblesvirtualawlibrary chanrobles virtual law library
On the other hand, petitioners argue that Article 764 of the New Civil Code was adopted to
provide a judicial remedy in case of non-fulfillment of conditions when revocation of the
donation has not been agreed upon by the parties. By way of contrast, when there is a
stipulation agreed upon by the parties providing for revocation in case of non-compliance,
no judicial action is necessary. It is then petitioners' claim that the action filed before the
Court of First Instance of Quezon is not one for revocation of the donation under Article 764
of the New Civil Code which prescribes in four (4) years, but one to enforce a written
contract which prescribes in ten (10) years.chanroblesvirtualawlibrarychanrobles virtual law
library
The petition is impressed with merit.chanroblesvirtualawlibrarychanrobles virtual law library
From the viewpoint of motive, purpose or cause, donations may be 1) simple, 2)
remuneratory or 3) onerous. A simple donation is one the cause of which is pure liberality
(no strings attached). A remuneratory donation is one where the donee gives something to
reward past or future services or because of future charges or burdens, when the value of
said services, burdens or charges is less than the value of the donation. An onerous
donation is one which is subject to burdens, charges or future services equal (or more) in
value than that of the thing donated (Edgardo L. Paras, Civil Code of the Philippines
Annotated, 11 ed., Vol. 11, p. 726).chanroblesvirtualawlibrarychanrobles virtual law library
It is the finding of the trial court, which is not disputed by the parties, that the donation
subject of this case is one with an onerous cause. It was made subject to the burden
requiring the donee to construct a chapel, a nursery and a kindergarten school in the
donated property within five years from execution of the deed of
donation.chanroblesvirtualawlibrarychanrobles virtual law library
Under the old Civil Code, it is a settled rule that donations with an onerous cause are
governed not by the law on donations but by the rules on contracts, as held in the cases
of Carlos v. Ramil, L-6736, September 5, 1911, 20 Phil. 183, Manalo vs. de Mesa, L-9449,
February 12, 1915, 29 Phil. 495. On the matter of prescription of actions for the revocation
of onerous donation, it was held that the general rules on prescription applies. (Parks v.
Province of Tarlac, supra.). The same rules apply under the New Civil Code as provided in
Article 733 thereof which provides:
Art. 733. 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.
It is true that under Article 764 of the New Civil Code, actions for the revocation of a
donation must be brought within four (4) years from the non-compliance of the conditions
of the donation. However, it is Our opinion that said article does not apply to onerous
donations in view of the specific provision of Article 733 providing that onerous donations
are governed by the rules on contracts.chanroblesvirtualawlibrarychanrobles virtual law
library

In the light of the above, the rules on contracts and the general rules on prescription and
not the rules on donations are applicable in the case at
bar.chanroblesvirtualawlibrarychanrobles virtual law library
Under Article 1306 of the New Civil Code, the parties to a contract have the right "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."
Paragraph 11 of the "Revival of Donation Intervivos, has provided that "violation of any of
the conditions (herein) shall cause the automatic reversion of the donated area to the donor,
his heirs, . . ., without the need of executing any other document for that purpose and
without obligation on the part of the DONOR". Said stipulation not being contrary to law,
morals, good customs, public order or public policy, is valid and binding upon the foundation
who voluntarily consented thereto.chanroblesvirtualawlibrarychanrobles virtual law library
The validity of the stipulation in the contract providing for the automatic reversion of the
donated property to the donor upon non-compliance cannot be doubted. It is in the nature
of an agreement granting a party the right to rescind a contract unilaterally in case of
breach, without need of going to court. Upon the happening of the resolutory condition of
non-compliance with the conditions of the contract, the donation is automatically revoked
without need of a judicial declaration to that effect. In the case of University of the
Philippines v. de los Angeles, L-28602, September 29, 1970, 35 SCRA 102-107, it was held:
. . . There is nothing in the law that prohibits the parties from entering into agreement that
violation of the terms of the contract would cause cancellation thereof. even without court
intervention. In other words, it is not always necessary for the injured party to resort to
court for rescission of the contract (Froilan v. Pan Oriental Shipping Co., et al.,
L-11897, 31 October 1964, 12 SCRA 276).
This was reiterated in the case of Angeles v. Calasanz, L-42283, March 18, 1985:
Well settled is, however, the rule that a judicial action for the rescission of a contract is not
necessary where the contract provides that it may be revoked and cancelled for violation of
any of its terms and conditions (Lopez v. Commissioner of Customs, 37 SCRA 327, 334, and
cases cited therein).chanroblesvirtualawlibrarychanrobles virtual law library
Resort to judicial action for rescission is obviously not contemplated. The validity of the
stipulation can not be seriously disputed. It is in the nature of a facultative resolutory
condition which in many cases has been upheld, by this court. (Ponce Enrile v. Court of
Appeals, 29 SCRA 504)
However, in the University of the Philippines v. Angeles case, (supra), it was held that in
cases where one of the parties contests or denies the rescission, "only the final award of the
court of competent jurisdiction can conclusively settle whether the resolution is proper or
not." It was held, thus:
. . . since in every case, where the extrajudicial resolution is contested, only the final award
of the court of competent jurisdiction can conclusively settle whether the resolution was
proper or not. It is in this sense that judicial action will be necessary as without it, the
extrajudicial resolution will remain contestable and subject to judicial invalidation, unless
attack thereon should become barred by acquiescence, estoppel or prescription.

It is clear, however, that judicial intervention is necessary not for purposes of obtaining a
judicial declaration rescinding a contract already deemed rescinded by virtue of an
agreement providing for rescission even without judicial intervention, but in order to
determine whether or not the recession was proper.chanroblesvirtualawlibrarychanrobles
virtual law library
The case of Parks v. Province of Tarlac, supra, relied upon by the trial court, is not
applicable in the case at bar. While the donation involved therein was also onerous, there
was no agreement in the donation providing for automatic rescission, thus, the need for a
judicial declaration revoking said donation.chanroblesvirtualawlibrarychanrobles virtual law
library
The trial court was therefore not correct in holding that the complaint in the case at bar is
barred by prescription under Article 764 of the New Civil Code because Article 764 does not
apply to onerous donations.chanroblesvirtualawlibrarychanrobles virtual law library
As provided in the donation executed on April 9, 1971, complaince with the terms and
conditions of the contract of donation, shall be made within five (5) years from its
execution. The complaint which was filed on September 23, 1980 was then well within the
ten (10) year prescriptive period to enforce a written contract (Article 1144[1], New Civil
Code), counted from April 9, 1976.chanroblesvirtualawlibrarychanrobles virtual law library
Finally, considering that the allegations in the complaint on the matter of the donee's noncompliance with the conditions of the donation have been contested by private respondents
who claimed that improvements more valuable than the donated property had been
introduced, a judgment on the pleadings is not proper. Moreover, in the absence of a motion
for judgment on the pleadings, the court cannot motu proprio render such judgment.
Section 1 of Rule 19 provides: "Where an answer fails to tender an issue, or otherwise
admits the material allegations of the adverse party's pleading, the court may, on motion of
that party, direct judgment on such pleading." (Emphasis supplied)chanrobles virtual law
library
ACCORDINGLY, the petition is GRANTED. Civil Case No. 8624 is hereby ordered reinstated.
Respondent judge is ordered to conduct a trial on the merits to determine the propriety of
the revocation of the subject donation.chanroblesvirtualawlibrarychanrobles virtual law
library
SO ORDERED.
98. Liguez v. Court of Appeals (102 Phil. 577)175
G.R. No. L-11240

December 18, 1957

CONCHITA LIGUEZ, Petitioner, vs. THE HONORABLE COURT OF APPEALS, MARIA


NGO VDA. DE LOPEZ, ET AL., Respondents.
Ruiz, Ruiz and Ruiz for appellant.
Laurel Law Offices for appellees.
REYES, J.B.L., J.:

From a decision of the Court of Appeals, affirming that of the Court of First Instance of
Davao dismissing her complaint for recovery of land, Conchita Liguez has resorted to this
Court, praying that the aforesaid decision be reversed on points of law. We
granted certiorari on October 9, 1956.chanroblesvirtualawlibrary chanrobles virtual law
library
The case began upon complaint filed by petitioner-appellant against the widow and heirs of
the late Salvador P. Lopez to recover a parcel of 51.84 hectares of land, situated in barrio
Bogac-Linot, of the municipality of Mati, Province of Davao. Plaintiff averred to be its legal
owner, pursuant to a deed of donation of said land, executed in her favor by the late owner,
Salvador P. Lopez, on 18 May 1943. The defense interposed was that the donation was null
and void for having an illicit causa or consideration, which was the plaintiff's entering into
marital relations with Salvador P. Lopez, a married man; and that the property had been
adjudicated to the appellees as heirs of Lopez by the court of First Instance, since
1949.chanroblesvirtualawlibrary chanrobles virtual law library
The Court of Appeals found that the deed of donation was prepared by the Justice of the
Peace of Mati, Davao, before whom it was signed and ratified on the date aforesaid. At the
time, the appellant Liguez was a minor, only 16 years of age. While the deed recitesThat the DONOR, Salvador P. Lopez, for and in the consideration of his love and affection for
the said DONEE, Conchita Liguez, and also for the good and valuable services rendered to
the DONOR by the DONEE, does by these presents, voluntarily give grant and donate to the
said donee, etc. (Paragraph 2, Exhibit "A")
the Court of Appeals found that when the donation was made, Lopez had been living with
the parents of appellant for barely a month; that the donation was made in view of the
desire of Salvador P. Lopez, a man of mature years, to have sexual relations with appellant
Conchita Liguez; that Lopez had confessed to his love for appellant to the instrumental
witnesses, with the remark that her parents would not allow Lopez to live with her unless he
first donated the land in question; that after the donation, Conchita Liguez and Salvador P.
Lopez lived together in the house that was built upon the latter's orders, until Lopez was
killed on July 1st, 1943, by some guerrillas who believed him to be proJapanese.chanroblesvirtualawlibrary chanrobles virtual law library
It was also ascertained by the Court of Appeals that the donated land originally belonged to
the conjugal partnership of Salvador P. Lopez and his wife, Maria Ngo; that the latter had
met and berated Conchita for living maritally with her husband, sometime during June of
1943; that the widow and children of Lopez were in possession of the land and made
improvements thereon; that the land was assessed in the tax rolls first in the name of Lopez
and later in that of his widow.; and that the deed of donation was never
recorded.chanroblesvirtualawlibrarychanrobles virtual law library
Upon these facts, the Court of Appeals held that the deed of donation was inoperative, and
null and void (1) because the husband, Lopez, had no right to donate conjugal property to
the plaintiff appellant; and (2) because the donation was tainted with illegal cause or
consideration, of which donor and donee were
participants.chanroblesvirtualawlibrary chanrobles virtual law library
Appellant vigorously contends that the Court of First Instance as well as the Court of
Appeals erred in holding the donation void for having an illicit cause or consideration. It is
argued that under Article 1274 of the Civil Code of 1889 (which was the governing law in

1948, when the donation was executed), "in contracts of pure beneficence the consideration
is the liberality of the donor", and that liberality per se can never be illegal, since it is
neither against law or morals or public policy.chanroblesvirtualawlibrary chanrobles virtual
law library
The flaw in this argument lies in ignoring that under Article 1274, liberality of the do or is
deemed causa in those contracts that are of "pure" beneficence; that is to say, contracts
designed solely and exclusively to procure the welfare of the beneficiary, without any intent
of producing any satisfaction for the donor; contracts, in other words, in which the idea of
self-interest is totally absent on the part of the transferor. For this very reason, the same
Article 1274 provides that in remuneratory contracts, the consideration is the service or
benefit for which the remuneration is given; causa is not liberality in these cases because
the contract or conveyance is not made out of pure beneficence, but "solvendi animo." In
consonance with this view, this Supreme Court in Philippine Long Distance Co. vs.
Jeturian * G.R. L-7756, July 30, 1955, like the Supreme Court of Spain in its decision of 16
Feb. 1899, has ruled that bonuses granted to employees to excite their zeal and efficiency,
with consequent benefit for the employer, do not constitute donation having liberality for a
consideration.chanroblesvirtualawlibrary chanrobles virtual law library
Here the facts as found by the Court of Appeals (and which we can not vary) demonstrate
that in making the donation in question, the late Salvador P. Lopez was not moved
exclusively by the desire to benefit appellant Conchita Liguez, but also to secure her
cohabiting with him, so that he could gratify his sexual impulses. This is clear from the
confession of Lopez to the witnesses Rodriguez and Ragay, that he was in love with
appellant, but her parents would not agree unless he donated the land in question to her.
Actually, therefore, the donation was but one part of an onerous transaction (at least with
appellant's parents) that must be viewed in its totality. Thus considered, the conveyance
was clearly predicated upon an illicit causa.chanroblesvirtualawlibrary chanrobles virtual law
library
Appellant seeks to differentiate between the alleged liberality of Lopez, as causa for the
donation in her favor, and his desire for cohabiting with appellant, as motives that impelled
him to make the donation, and quotes from Manresa and the jurisprudence of this Court on
the distinction that must be maintained between causa and motives (De Jesus vs. Urrutia
and Co., 33 Phil. 171). It is well to note, however that Manresa himself (Vol. 8, pp. 641642), while maintaining the distinction and upholding the inoperativeness of the motives of
the parties to determine the validity of the contract, expressly excepts from the rule those
contracts that are conditioned upon the attainment of the motives of either party.
. . . distincion importantisima, que impide anular el contrato por la sola influencia de los
motivos a no ser que se hubiera subordinando al cumplimiento de estos como condiciones la
eficacia de aquel.
The same view is held by the Supreme Court of Spain, in its decisions of February 4, 1941,
and December 4, 1946, holding that the motive may be regarded as causa when it
predetermines the purpose of the contract.chanroblesvirtualawlibrary chanrobles virtual law
library
In the present case, it is scarcely disputable that Lopez would not have conveyed the
property in question had he known that appellant would refuse to cohabit with him; so that
the cohabitation was an implied condition to the donation, and being unlawful, necessarily
tainted the donation itself.chanroblesvirtualawlibrary chanrobles virtual law library

The Court of Appeals rejected the appellant's claim on the basis of the well- known rule "in
pari delicto non oritur actio" as embodied in Article 1306 of 1889 (reproduced in Article
1412 of the new Civil Code):
ART. 1412. If the act in which the unlawful or forbidden cause consists does not constitute a
criminal offense, the following rules shall be observed:chanrobles virtual law library
(1) When the fault is on the part of both contracting parties, neither may recover what he
has given by virtue of the contract, or demand the performance of the other's
undertaking;chanrobles virtual law library
(2) When only one of the contracting parties is at fault, he cannot recover, what he has
given by reason of the contract, or ask for fulfillment of what has been promised him. The
other, who is not at fault, may demand the return of what he has given without any
obligation to comply with his promise.
In our opinion, the Court of Appeals erred in applying to the present case the pari
delictorule. First, because it can not be said that both parties here had equal guilt when we
consider that as against the deceased Salvador P. Lopez, who was a man advanced in years
and mature experience, the appellant was a mere minor, 16 years of age, when the
donation was made; that there is no finding made by the Court of Appeals that she was fully
aware of the terms of the bargain entered into by and Lopez and her parents; that, her
acceptance in the deed of donation (which was authorized by Article 626 of the Old Civil
Code) did not necessarily imply knowledge of conditions and terms not set forth therein;
and that the substance of the testimony of the instrumental witnesses is that it was the
appellant's parents who insisted on the donation before allowing her to live with Lopez.
These facts are more suggestive of seduction than of immoral bargaining on the part of
appellant. It must not be forgotten that illegality is not presumed, but must be duly and
adequately proved.chanroblesvirtualawlibrary chanrobles virtual law library
In the second place, the rule that parties to an illegal contract, if equally guilty, will not be
aided by the law but will both be left where it finds them, has been interpreted by this Court
as barring the party from pleading the illegality of the bargain either as a cause of action or
as a defense. Memo auditor propriam turpitudinem allegans. Said this Court in Perez vs.
Herranz, 7 Phil. 695-696:
It is unnecessary to determine whether a vessel for which a certificate and license have
been fraudulently obtained incurs forfeiture under these or any other provisions of this act.
It is enough for this case that the statute prohibits such an arrangement as that between
the plaintiff and defendant so as to render illegal both the arrangement itself and all
contracts between the parties growing out of it.chanroblesvirtualawlibrary chanrobles virtual
law library
It does not, however, follow that the plaintiff can succeed in this action. There are two
answers to his claim as urged in his brief. It is a familiar principle that the courts will not aid
either party to enforce an illegal contract, but will leave them both where it finds them; but
where the plaintiff can establish a cause of action without exposing its illegality, the vice
does not affect his right to recover. The American authorities cited by the plaintiff fully
sustain this doctrine. The principle applies equally to a defense. The law in those islands
applicable to the case is found in article 1305 of the Civil Code, shutting out from relief
either of the two guilty parties to an illegal or vicious
contract.chanroblesvirtualawlibrary chanrobles virtual law library

In the case at bar the plaintiff could establish prima facie his sole ownership by the bill of
sale from Smith, Bell and Co. and the official registration. The defendant, on his part, might
overthrow this title by proof through a certain subsequent agreement between him and the
plaintiff, dated March 16, 1902, that they had become owners in common of the vessel, 'the
agreement not disclosing the illegal motive for placing the formal title in the plaintiff. Such
an ownership is not in itself prohibited, for the United States courts recognize the equitable
ownership of a vessel as against the holder of a legal title, where the arrangement is not
one in fraud of the law. (Weston vs. Penniman, Federal Case 17455; Scudder vs. Calais
Steamboat Company, Federal Case 12566.).chanroblesvirtualawlibrary chanrobles virtual
law library
On this proof, the defendant being a part owner of the vessel, would have defeated the
action for its exclusive possession by the plaintiff. The burden would then be cast upon the
plaintiff to show the illegality of the arrangement, which the cases cited he would not be
allowed to do.
The rule was reaffirmed in Lima vs. Lini Chu Kao, 51 Phil.
477.chanroblesvirtualawlibrary chanrobles virtual law library
The situation confronting us is exactly analogous. The appellant seeks recovery of the
disputed land on the strength of a donation regular on its face. To defeat its effect, the
appellees must plead and prove that the same is illegal. But such plea on the part of the
Lopez heirs is not receivable, since Lopez, himself, if living, would be barred from setting up
that plea; and his heirs, as his privies and successors in interest, can have no better rights
than Lopez himself.chanroblesvirtualawlibrary chanrobles virtual law library
Appellees, as successors of the late donor, being thus precluded from pleading the defense
of immorality or illegal causa of the donation, the total or partial ineffectiveness of the same
must be decided by different legal principles. In this regard, the Court of Appeals correctly
held that Lopez could not donate the entirety of the property in litigation, to the prejudice of
his wife Maria Ngo, because said property was conjugal in character and the right of the
husband to donate community property is strictly limited by law (Civil Code of 1889, Arts.
1409, 1415, 1413; Baello vs. Villanueva, 54 Phil. 213).
ART. 1409. The conjugal partnership shall also be chargeable with anything which may have
been given or promised by the husband alone to the children born of the marriage in order
to obtain employment for them or give then, a profession or by both spouses by common
consent, should they not have stipulated that such expenditures should be borne in whole or
in part by the separate property of one of them.".chanroblesvirtualawlibrary chanrobles
virtual law library
ART. 1415. The husband may dispose of the property of the conjugal partnership for the
purposes mentioned in Article 1409.)chanrobles virtual law library
ART. 1413. In addition to his powers as manager the husband may for a valuable
consideration alienate and encumber the property of the conjugal partnership without the
consent of the wife.
The text of the articles makes it plain that the donation made by the husband in
contravention of law is not void in its entirety, but only in so far as it prejudices the interest
of the wife. In this regard, as Manresa points out (Commentaries, 5th Ed., pp. 650-651,

652-653), the law asks no distinction between gratuitous transfers and conveyances for a
consideration.
Puede la mujer como proprietaria hacer anular las donaciones aun durante el matrimonio?
Esta es, en suma, la cuestion, reducida a determinar si la distinta naturaleza entre los actos
a titulo oneroso y los actos a titulo lucrativo, y sus especiales y diversas circunstancias,
pueden motivar una solucion diferente en cuanto a la epoca en que la mujer he de reclamar
y obtener la nulidad del acto; cuestion que no deja de ser
interesantisima.chanroblesvirtualawlibrary chanrobles virtual law library
El Codigo, a pesar de la variacion que ha introducido en el proyecto de 1851, poniendo
como segundo parrafo del articulo 1.413, o como limitacion de las enajenaciones u
obligaciones a titulo oneroso, lo que era una limitacion general de todos los actos del
marido, muestra, sin embargo, que no ha variado de criterio y que para el las donaciones
deben en todo equipararse a cualquier otro acto ilegal o frraudulento de caracter oneroso, al
decir en el art. 1.419: "Tambien se traera a colacion en el inventario de la sociedad- el
importe de las donaciones y enajenaciones que deban considerarse ilegales o fraudulentas,
con sujecion al art. 1.413.' (Debio tambien citarse el articulo 1.415, que es el que habla de
donaciones.)chanrobles virtual law library
"En resumen: el marido solo puede donar los bienes gananciales dentro de los limites
marcados en el art. 1.415. Sin embargo, solo la mujer o sus herederos pueden reclamar
contra la valides de la donacion, pues solo en su interes establece la prohibicion. La mujer o
sus herederos, para poder dejar sin efecto el acto, han de sufrir verdadero perjuicio,
entendiendose que no le hay hasta, tanto que, terminada por cualquier causa la sociedad de
gananciales, y hecha su liquidacion, no pueda imputarse lo donado al haber por cualquier
concepto del marido, ni obtener en su consecuencia la mujer la dibida indemnizacion. La
donacioni reviste por tanto legalmente, una eficacia condicional, y en armonia con este
caracter, deben fijarse los efectos de la misma con relacion a los adquirentes y a los terceros
poseedores, teniendo, en su caso, en cuenta lo dispuesto en la ley Hipotecaria. Para
prevenir todo perjuicio, puede la mujer, durante el matrimonio inmediatamente al acto,
hacer constar ante los Tribunales su existencia y solicitor medidas de precaucion, como ya
se ha dicho. Para evitarlo en lo sucesivo, y cuando las circunstancias lo requieran, puede
instar la declaracion de prodigalidad.
To determine the prejudice to the widow, it must be shown that the value of her share in the
property donated can not be paid out of the husband's share of the community profits. The
requisite data, however, are not available to us and necessitate a remand of the records to
the court of origin that settled the estate of the late Salvador P.
Lopez.chanroblesvirtualawlibrary chanrobles virtual law library
The situation of the children and forced heirs of Lopez approximates that of the widow. As
privies of their parent, they are barred from invoking the illegality of the donation. But their
right to a legitime out of his estate is not thereby affected, since the legitime is granted
them by the law itself, over and above the wishes of the deceased. Hence, the forced heirs
are entitled to have the donation set aside in so far as in officious: i.e., in excess of the
portion of free disposal (Civil Code of 1889, Articles 636, 654) computed as provided in
Articles 818 and 819, and bearing in mind that "collationable gifts" under Article 818 should
include gifts made not only in favor of the forced heirs, but even those made in favor of
strangers, as decided by the Supreme Court of Spain in its decisions of 4 May 1899 and 16
June 1902. So that in computing the legitimes, the value of the property to herein appellant,
Conchita Liguez, should be considered part of the donor's estate. Once again, only the court

of origin has the requisite date to determine whether the donation is inofficious or
not.chanroblesvirtualawlibrary chanrobles virtual law library
With regard to the improvements in the land in question, the same should be governed by
the rules of accession and possession in good faith, it being undisputed that the widow and
heirs of Lopez were unaware of the donation in favor of the appellant when the
improvements were made.chanroblesvirtualawlibrary chanrobles virtual law library
The appellees, relying on Galion vs. Garayes, 53 Phil. 43, contend that by her failure to
appear at the liquidation proceedings of the estate of Salvador P. Lopez in July 1943, the
appellant has forfeited her right to uphold the donation if the prejudice to the widow Maria
Ngo resulting from the donation could be made good out of the husband's share in the
conjugal profits. It is also argued that appellant was guilty of laches in failing to enforce her
rights as donee until 1951. This line of argument overlooks the capital fact that in 1943,
appellant was still a minor of sixteen; and she did not reach the age of majority until 1948.
Hence, her action in 1951 was only delayed three years. Nor could she be properly expected
to intervene in the settlement of the estate of Lopez: first, because she was a minor during
the great part of the proceedings; second, because she was not given notice thereof ; and
third, because the donation did not make her a creditor of the estate. As we have ruled
in Lopez vs. Olbes, 15 Phil. 547-548:
The prima facie donation inter vivos and its acceptance by the donees having been proved
by means of a public instrument, and the donor having been duly notified of said
acceptance, the contract is perfect and obligatory and it is perfectly in order to demand its
fulfillment, unless an exception is proved which is based on some legal reason opportunely
alleged by the donor or her heirs.chanroblesvirtualawlibrary chanrobles virtual law library
So long as the donation in question has not been judicially proved and declared to be null,
inefficacious, or irregular, the land donated is of the absolute ownership of the donees and
consequently, does not form a part of the property of the estate of the deceased Martina
Lopez; wherefore the action instituted demanding compliance with the contract, the delivery
by the deforciant of the land donated, or that it be, prohibited to disturb the right of the
donees, should not be considered as incidental to the probate proceedings aforementioned.
The case of Galion vs. Gayares, supra, is not in point. First, because that case involved a
stimulated transfer that case have no effect, while a donation with illegal causa may
produce effects under certain circumstances where the parties are not of equal guilt; and
again, because the transferee in the Galion case took the property subject to lis
pendensnotice, that in this case does not exist.chanroblesvirtualawlibrary chanrobles virtual
law library
In view of the foregoing, the decisions appealed from are reversed and set aside, and the
appellant Conchita Liguez declared entitled to so much of the donated property as may be
found, upon proper liquidation, not to prejudice the share of the widow Maria Ngo in the
conjugal partnership with Salvador P. Lopez or the legitimes of the forced heirs of the latter.
The records are ordered remanded to the court of origin for further proceedings in
accordance with this opinion. Costs against appellees. So ordered.
99. Pershing Tan Queto v. Court of Appeals (148 SCRA 54)
FACTS: Restituta Tacalinar Guanaco de Pombuena received the questioned lot, either as a
purported donation or by way of purchase on February 11, 1927, with P50.00 as the alleged

consideration thereof. The transaction took place during her mother's lifetime, her father
having predeceased the mother, while RESTITUTA was already married to her husband Juan
Pombuena. On January 22, 1935, JUAN filed for himself and his supposed co-owner
RESTITUTA an application for a Torrens Title over the land. JUAN was pronounced in the
Cadastral Case as the owner of the land and an Original Certificate of Title was issued in
JUAN's name. On September 22, 1949 a contract of lease over the lot was entered into
between Pershing Tan Queto and RESTITUTA (with the consent of her husband JUAN) for a
period of ten (10) years. On December 27, 1960 RESTITUTA sued TAN QUETO for unlawful
detainer (the lease contract having expired) before the Municipal Court. The unlawful
detainer case was won by the spouses in the Municipal Court; but on appeal in the Court of
First Instance, the entire case was DISMISSED because of the barter whereby TAN QUETO
became the owner of the disputed lot, and the spouses RESTITUTA and JUAN in turn
became the owners of a parcel of land with a house constructed thereon by TAN QUETO, the
previous owner. After the barter agreement, TAN QUETO constructed on the disputed land a
concrete building, without any objection on the part of RESTITUTA Later, RESTITUTA sued
both JUAN and TAN QUETO for reconveyance of the title over the registered but disputed lot,
for annulment of the barter, and for recovery of the land with damages. Both the Court of
First Instance and the Court of Appeals held in favor of Restituta. Both held that the
disputed lot is paraphernal property and that TAN QUETO is a builder in bad faith.
ISSUE: Is the questioned lot paraphernal or conjugal (was the donation/sale valid)?
HELD: The land is conjugal, not paraphernal. The oral donation of the lot cannot be a valid
donation intervivos because it was not executed in a public instrument (Art. 749, Civil
Code), nor as a valid donation mortis causa for the formalities of a will were not complied
with. The allegation that the transfer was a conveyance to RESTITUTA of her hereditary
share in the estate of her mother (or parents) cannot be sustained for the contractual
transmission of future inheritance is generally prohibited. The fact is ownership was
acquired by the spouses by tradition (delivery) as a consequence of the contract of sale
(See Art. 712, Civil Code) and consideration of P50.00. The lot is therefore conjugal, having
been acquired by the spouses thru onerous title (the money used being presumably
conjugal there being no proof that RESTITUTA had paraphernal funds of her own).

G.R. No. 72908 August 11, 1989


EUFEMIA PAJARILLO, CLAUDIO SUTERIO, JR., NYMIA SUTERIO and MARILYN
SUTERIO, Petitioners, vs. INTERMEDIATE APPELLATE COURT, THIRD CIVIL CASES
DIVISION, SALUD SUTERIO and PEDRO MATIAS, Respondents.
Agustin A. Ferrer for petitioners.chanrobles virtual law library
Alfredo I. Raya for respondents.
CRUZ, J.:
This is one of those distasteful litigations involving a controversy among close relatives over
properties left by a common ascendant. The petitioners are the widow and children of the
brother of the principal private respondent. She and her brother appear to be the only
remaining issue of the mother who seems to have caused all the present confusion. The
record does not show how close, if at all, the members of this small family were. What is

certain is that there is no affection now among the protagonists in this


case.chanroblesvirtualawlibrary chanrobles virtual law library
The mother was Juana Balane de Suterio, who had a brother named Felipe Balane and a
sister named Perfecta Balane de Cordero. Perfecta died in 1945 leaving inter alia a tract of
land consisting of about 28 hectares and covered by TCT No. 4671 in the Registry of Deeds
of Quezon Province. On May 20, 1946, Juana and Felipe executed a public instrument
entitled "Extra-judicial Settlement of the Estate of the Deceased Perfecta Balane de
Cordero." 1In it they disposed of the said property as follows:
EXTRA-JUDICIAL SETTLEMENT OF THE ESTATE OF DECEASED PERFECTA BALANE DE
CORDERO.chanroblesvirtualawlibrary chanrobles virtual law library
This agreement made to 20th day of May, 1946, by and between Felipe Balane and Juana
Balane de Suterio, both of age and residents of Macalelon, Tayabas,
Philippines.chanroblesvirtualawlibrary chanrobles virtual law library
WITNESSETH: chanrobles virtual law library
That whereas, the said Felipe Balane and Juana Balane de Suterio are the only brother and
sister respectively and forced heirs of Perfecta Balane de Cordero who dies intestate on
January 21, 1945; chanrobles virtual law library
That whereas, the said Perfects Balane de Cordero, deceased, left property described as
follows: chanrobles virtual law library
TRANSFER CERTIFICATE OF TITLE NO. 4671.chanroblesvirtualawlibrarychanrobles virtual
law library
Province of Tayabas.chanroblesvirtualawlibrary chanrobles virtual law library
A parcel of land (Lot No. 6-A, Plan Psu-12210), with an buildings and improvements except
those herein expressly noted as belonging to other person, situated in the barrio of Luctol,
Municipality of Macalelon. Bounded on the NE., by Lot No. 6-B; on the E., by property by
Andrea Fernandez, the sapa Luctob and the sapa Patay; on the SE., by properties of Andrea
Fernandez and Silvestra Mereis on the SW., by properties of Felix Rodriguez, Dionisio Fornea
Placido Abistado and Adriano Abistado and the mangrove of the government; and on the
NW., by properties of Orilleneda Mariano, Glindro Maxima Orilleneda Placida Forcados and
Basilio Rabe .. .. .. .. .. .. .. containing an area of TWO HUNDRED EIGHTY FIVE THOUSAND
THREE HUNDRED FIFTY-THREE SQUARE METERS (285,353) more or
less.chanroblesvirtualawlibrary chanrobles virtual law library
That whereas, we Felipe Balane and Juana Balane de Suterio, the only heirs of the property
described above left by the deceased Perfecta Balane de Cordero, do hereby agree in
carrying out the antemortem wish of our beloved deceased sister that in consideration of
love and affection the property described above be donated to Salud Sutexio de
Matias.chanroblesvirtualawlibrary chanrobles virtual law library
That whereas, the estate left by the said Perfecta Balane de Castro, deceased, is not free
from obligation or debt. It has an incumbrance of about ONE THOUSAND PESOS

(P1,000.00) to the Philippine National Bank, Tayabas


Branch.chanroblesvirtualawlibrary chanrobles virtual law library
That whereas, Salud Suterio de Matias, to whom this property is donated extra-judicially as
agreed upon by both heirs, shall assume the said obligation to the Philippine National Bank,
Tayabas Branch.chanroblesvirtualawlibrarychanrobles virtual law library
NOW, THEREFORE, we Felipe Balane and Juana Balane de Suterio have mutually agreed and
covenanted to adjudicate, give, transfer and convey the property described above to Salud
Suterio de Matias heirs, executors, administrators and
assign.chanroblesvirtualawlibrary chanrobles virtual law library
And the donee does hereby accept this donation and does hereby express her gratitutde for
the kindness and liberality of the donor.chanroblesvirtualawlibrary chanrobles virtual law
library
IN WITNESS WHEREOF, we have hereunto set our hands tills 20th day of May, 1946.
(Sgd.) FELIPE BALANE FELIPE BALANE chanrobles virtual law library
(Sgd.) JUANA BALANE DE SUTERIO JUANA BALANE DE SUTERIO chanrobles virtual law
library
(Acknowledgment)
On June 20, 1946, Salud Suterio executed the following public instrument, 2petitioner
Eufemia Pajarillo was one of the witnesses: chanrobles virtual law library
KNOW ALL MEN BY THESE PRESENTS: chanrobles virtual law library
That on May 20, 1946, FELIPE BALANE and JUANA BALANE DE SUTERIO, the only heirs to
the properties of the late PERFECTA BALANE DE CORDERO, executed a DEED OF DONATION
in favor of the undersigned and the said donation was made, in accordance to
the antemortem wish of my late aunt, Perfecta Balane de Cordero, to the effect that the
property described in the Deed of Donation, be given to me because of her love and
affection for me, being her only niece.chanroblesvirtualawlibrary chanrobles virtual law
library
That, I, SALUD SUTERIO, DE MATIAS, the only DONEE, do hereby receive and accept this
donation and further express my gratitude for the kindness and liberality of the DONORS,
FELIPE BALANE and JUANA BALANE DE SUTERIO.chanroblesvirtualawlibrary chanrobles
virtual law library
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of June, 1946.
(Sgd.) SALUD SUTERIO DE MATIAS
SUTERIO DE MATIAS
Donee

Signed in the presence ofchanrobles virtual law library


(Sgd.) SOFRONIO BALANE chanrobles virtual law library
(Sgd.) EUFEMIA P. SUTERIO
(Acknowledgment)
These instruments were never registered nor was title transferred in Salud's name although
she says she immediately took possession of the land. Meantime, intestate proceedings
were instituted on the estate of Perfecta and the said land was among those included in the
inventory of the properties belonging to the decedent. 3Salud interposed no objection to its
inclusion nor did she oppose its subsequent adjudication to her mother Juana in the project
of partition. It is not clear if the land was ever registered in Juana's name. However, there is
evidence that Juana confirmed the earlier donation of the land to Salud but requested that
she be allowed to possess the same and enjoy its fruits, until her death. 4It has also not
been controverted that Salud paid the P1,000.00 loan for which the land was
mortgaged.chanroblesvirtualawlibrary chanrobles virtual law library
Salud says that sometime in 1951, acceding to this request, she transferred the possession
of the land to her mother, who was then staying with Claudio and his family. During the
period they were occupying the land, Claudio paid the realty taxes thereon . 5On May 25,
1956, Juana executed a deed of absolute sale conveying the land to Claudio for the declared
consideration of P12,000.00. 6Two years later, on August 27, 1958, Claudio had the land
registered in as name and was issued TCT No. 32050 in the land records of Quezon
Province. 7chanrobles virtual law library
Claudio died in 1961 and his mother in 1963. On June 30, 1965, the private respondents
filed a complaint for the reconveyance of the property on the ground that the deed of sale in
favor of Claudio was fictitious and its registration in his name was null and
void . 8chanrobles virtual law library
Salud (joined by her husband) alleged that she was unaware until later of the supposed sale
of the land to Claudio. She faulted it as having been procured through fraud and improper
influence on her sick and aged mother. She claimed that no compensation was actually paid
by Claudio and that the transaction was deliberately concealed from her by her brother and
the defendants. 9For their part, the defendants assailed the donation to Salud as legally
inefficacious and defective and contended that her complaint was barred by prescription,
estoppel and res judicata. They also filed a counterclaim questioning the sale to Salud by
her mother of another tract of land, in which they said they were entitled to share as
Juana's heirs. 10chanrobles virtual law library
On April 17,1979, Judge Juan M. Montecillo of the Court of First Instance of Quezon
rendered judgment upholding the donation to the plaintiff and annulling the deed of sale
and the registration of the land in favor of Claudio Suterio, Sr. The defendants were required
to reconvey the land to Salud Suterio even as their counterclaim was dismissed for lack of
evidence. 11 On appeal, the decision was affirmed in toto. 12 The respondent court is now
sought to be reversed in this petition for certiorari under Rule 45 of the Rules of
Court.chanroblesvirtualawlibrary chanrobles virtual law library

We hold at the outset that, contrary to the ruling in the challenged decision, the petitioners
have the legal personality to challenge the validity of the donation on which Salud bases her
claim to the property under litigation. As defendants in the complaint for reconveyance, they
had every right to resist the plaintiffs' allegation that she was the owner of the subject
property by virtue of the claimed donation. Recognition of that donation would topple the
props of their own contention that Juana could dispose of the property as its owner when
she sold it to Claudio Suterio in 1956.chanroblesvirtualawlibrary chanrobles virtual law
library
The petitioners also assail the intrinsic validity of the extrajudical settlement and submit that
it is not really a donation as conceptually understood in civil law. Their argument is that the
real donor of the property was Perfecta, the deceased sister, who, however, could no longer
bestow the intended gift. For their part, Felipe and Juana could not have made, the donation
either because they were not moved by the same sentiments Perfects had for her niece
Salud. That feeling would have provided the required consideration if Perfects herself had
made the donation, but not the other two.chanroblesvirtualawlibrarychanrobles virtual law
library
This appears to be too much nitpicking, if not sophistry. Felipe and Juana had declared
themselves the heirs of Perfecta and the owners of the property in question. As such, they
were free to give the land to whomever they pleased and for whatever reason they saw fit.
Hence, if they chose to respect Perfecta's wishes and carry out her intentions by donating
the land to Salud, there was no legal impediment to their doing so. In fact, that was not
only the legal but also the moral thing to do.chanroblesvirtualawlibrary chanrobles virtual
law library
There is no question that Felipe and Juana could have simply disregarded their sister's
sentiments and decided not to donate the property to Salud, keeping the same for
themselves. The fact that they did not do this speaks well indeed of their integrity and their
loyalty as well to their deceased sister. The extrajudicial settlement also reflects their own
affection for Salud which constituted the valid consideration for their own act of liberality.
Notably, in her acceptance of the donation, Salud referred to 'the donors Felipe Balane and
Juana Balane de Suterio," and not Perfecta.chanroblesvirtualawlibrary chanrobles virtual law
library
It is also pointed out that the donation is defective in form because of non-compliance with
the requirements of the law regarding its acceptance. As it was executed in 1946, the
applicable rule is Article 633 of the old Civil Code reading as follows:
Art. 633. In order that a donation of real property be valid it must be made by public
instrument in which the property donated must be specifically described and the amount of
the charges to be assumed by the donee expressed.chanroblesvirtualawlibrary chanrobles
virtual law library
The acceptance may be made, in the deed of gift or in a separate public writing; but it shall
produce no effect if not made during the lifetime of the
donor.chanroblesvirtualawlibrary chanrobles virtual law library
If the acceptance is made, by separate public instrument, authentic notice thereof shall be
given the donor, and this proceeding shall be noted in both instruments.

There is no question that the donation was accepted in a separate public instrument and
that it was duly communicated to the donors. Even the petitioners cannot deny this. But
what they do contend is that such acceptance was not "noted in both instruments," meaning
the extrajudicial partition itself and the instrument of acceptance, as required by the Civil
Code.chanroblesvirtualawlibrary chanrobles virtual law library
That is perfectly true. There is nothing in either of the two instruments showing that
"authentic notice" of the acceptance was made by Salud to Juana and Felipe. And while the
first instrument contains the statement that "the donee does hereby accept this donation
and does hereby express her gratitude for the kindness and liberality of the donor," the only
signatories thereof were Felipe Balane and Juana Balane de Suterio. That was in fact the
reason for the separate instrument of acceptance signed by Salud a month
later.chanroblesvirtualawlibrary chanrobles virtual law library
A strict interpretation of Article 633 can lead to no other conclusion than the annulment of
the donation for being defective in form as urged by the petitioners. This would be in
keeping with the unmistakable language of the above-quoted provision. However, we find
that under the circumstances of the present case, a literal adherence to the requirement of
the law might result not in justice to the parties but conversely a distortion of their
intentions. It is also a policy of the Court to avoid such an
intepretation.chanroblesvirtualawlibrary chanrobles virtual law library
The purpose of the formal requirement is to insure that the acceptance of the donation is
duly communicated to the donor. In the case at bar, it is not even suggested that Juana was
unaware of the acceptance for she in fact confirmed it later and requested that the donated
land be not registered during her lifetime by Salud. 13Given this significant evidence, the
Court cannot in conscience declare the donation ineffective because there is no notation in
the extrajudicial settlement of the donee's acceptance. That would be placing too much
stress on mere form over substance. It would also disregard the clear reality of the
acceptance of the donation as manifested in the separate instrument dated June 20,1946,
and as later acknowledged by Juana.chanroblesvirtualawlibrary chanrobles virtual law library
The cases cited by the parties in their respective memoranda are not really in point.
In Legasto v. Verzosa, 14there was no evidence whatsoever that the claimed donations had
been accepted, as stressed by Justice Villa-Real. The same observation is made of Santos v.
Robledo, 15where Justice Torres noted that the acceptance of the donation did not appear in
the deed of donation or in any other instrument.chanroblesvirtualawlibrary chanrobles
virtual law library
The petitioners would also fault the private respondents for laches and argue that Salud's
inaction in protection of her rights should bar her from asserting them at this late hour.
Specifically, it is pointed out that she failed to register the deed of donation and its
acceptance in 1946; did not oppose the inclusion of the subject land in the inventory of
Perfecta's properties submitted in the intestate proceedings in 1946; did not object to the
adjudication of the land to Juana in the project of partition in 1951; did not protest the sale
of the land to Claudio Suterio in 1956; and did not question its registration in his name in
1958. It is contended that all these acts constitute laches, which has been described by this
Court thus: chanrobles virtual law library
An estoppel by laches arises from the negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it. 16 chanrobles virtual law library

The problem with the petitioners' theory is that it would regard Juana and Salud as
strangers when they are in fact mother and daughter. One may expect a person to be
vigilant of his rights when dealing with an acquaintance or associate, or even with a friend,
but not when the other person is a close relative, as in the case at bar. To begin with, the
land came from Juana herself. Secondly, she requested her daughter not to register the land
as long as she was still alive so she could enjoy its fruits until her death. To Salud, it was
not difficult to comply with this request, coming as it did from her own mother. There was
no reason to disobey her. She did not have to protect herself against her own mother.
Indeed, what would have been unseemly was her registering the land against her mother's
request as if she had no confidence in her. Salud did no less than what any dutiful daughter
would have done under the circumstances.chanroblesvirtualawlibrarychanrobles virtual law
library
If Salud did not protest the inclusion of the land in the inventory of Perfecta's properties and
its subsequent adjudication to Juana in the intestate proceedings, it was because she did
not feel threatened by these acts. She did not distrust her mother. Moreover, Juana had
herself acknowledged the donation when she was asked in whose name the property would
be registered following the intestate proceedings. Salud felt safe because she had the
extrajudicial settlement to rely on to prove that her mother and her uncle had donated the
subject land to her.chanroblesvirtualawlibrary chanrobles virtual law library
There is nothing in this instrument to suggest that the donation was to take effect upon the
death of the donors as to make it a donation mortis causa, as urged by the petitioners. The
donation became effective upon acceptance by Salud except that, in obedience to her
mother's request, she chose not to register the land in the meantime and to allow her
mother to enjoy its fruits. What was deferred was not its effectivity but only its enjoyment
by Salud. Registration was not necessary to make the donation a binding commitment
insofar as the donors and the donee were concerned. 17chanrobles virtual law library
As for her inaction against the deed of sale in favor of her brother Claudio, it should be
noted in the first place that she was not aware of it when it was executed in 1956. Her
mother, who was already 76 years old at the time, never informed her about it, nor did her
brother or any of the defendants, for reasons of their own. It was only later, when the sale
was registered in 1958 and a new title to the land was issued to Claudio, that she started
asking questions. Even then, being a sister to Claudio, she did not immediatey take legal
steps.chanroblesvirtualawlibrary chanrobles virtual law library
It is natural, even among non-relatives, to seek a non-judicial settlement through extralegal measures before going to court. It is more so in the case of relatives, who should
avoid as much as possible the asperity and bitterness of litigation. That is what Salud did
when she repeatedly asked the petitioners for the return of the property albeit to no avail. It
was only when it became clear that amicable persuasion was not possible that she decided
to sue the wife and children of her departed brother.chanroblesvirtualawlibrary chanrobles
virtual law library
The petitioners stress that it took Salud all of seven years from the registration of the land
in Claudios's name before she filed the complaint for reconveyance against them. That is
true. But if one remembers that her brother died only in 1961 and her own mother only in
1963, at the age of 83, it will be easy to understand the reason for the delay, which would
otherwise have been unjustified. Suits among brothers and sisters are especially painful to
their parents. Salud must have thought many times about filing her complaint against her
brother Claudio while her old mother was still alive. In fact, Salud hesitated still even after

her mother's death and took two more years before she finally filed her complaint against
Claudio's wife and children.chanroblesvirtualawlibrarychanrobles virtual law library
It is clear that Juana Balane de Suterio had no right to sell the subject land to Claudio
because she was no longer its owner, having previously donated it to her daughter Salud.
Juana herself was holding the land merely as a trustee of Salud, who had transferred
possession to her mother at the old woman's request. The deed of sale was itself vitiated by
bad faith as Claudio is presumed to have known of the previous donation to his sister Salud,
whose acceptance of the donation was formally witnessed by hiw own wife, the herein
principal petitioner. 18When Claudio registered the land in his name knowing there was a
flaw in his title, an implied trust was created in favor of Salud as the real owner of the
property in accordance with Article 1456 of the Civil Code, reading as follows: chanrobles
virtual law library
If the property is acquired through mistake or fraud, the person obtaining it is, by force of
law, considered a trustee of an implied trust for the benefit of the person from whom the
property comes.chanroblesvirtualawlibrary chanrobles virtual law library
As trustor, Salud had every right to sue for the recovery of the land in the action for
reconveyance against Claudio's heirs. As we said in Vda. de Jacinto, et al. v. Vda. de
Jacinto, et al. ... 19 chanrobles virtual law library
Public policy demands that a person guilty of fraud or at least, of breach of trust, should not
be allowed to use a Torrens title as a shield against the consequences of his own
wrongdoing.chanroblesvirtualawlibrary chanrobles virtual law library
The petitioners do not insist on prescription as a bar to the action for reconveyance, and
understandably so. The legal principle is that if the registration of the land is fraudulent and
the person in whose name the land is registered thus holds it as a mere trustee, the real
owner is entitled to file an action for reconveyance of the property within a period of ten
years. As we have held in many cases: chanrobles virtual law library
Where the action is one for reconveyance based on constructive trust, a ten-year period is
allowed. 20 chanrobles virtual law library
An action for reconveyance of realty, based upon a constructive or implied trust resulting
from fraud, may be barred by prescription. The prescriptive period is reckoned from the
issuance of the title which operates as a constructive notice. 21 chanrobles virtual law library
While actions to enforce a constructive trust prescribe in 10 years from registration of the
property, private respondents' right commenced from actual discovery of petitioner's act of
defraudation. 22 chanrobles virtual law library
The record shows that while the land was registered in the name of Claudio Suterio, Sr. in
1958, the complaint for reconveyance was filed by the petitioners in 1965, or still within the
ten-year prescriptive period.chanroblesvirtualawlibrary chanrobles virtual law library
The last issue raised by the petitioners, viz., the validity of the deed of sale executed by
Juana Balane de Suterio on January 29,1950, in favor of Salud Suterio, 23 need not detain
us too long. The trial court sustained the contract for lack of sufficient evidence to invalidate
it and was upheld by the respondent court. We see no reason to disturb their factual finding,

absent a showing that it was reached arbitrarily. Interestingly, it occurred to the petitioners
to question the transaction only when they were sued by the private respondents, after ten
years from the date of the sale. This is an even longer period than the nine years during
which the petitioners say Salud Suterio was sleeping on her rights following the sale of her
land to Claudio Suterio.chanroblesvirtualawlibrary chanrobles virtual law library
WHEREFORE, the petition is DENIED, with costs against the petitioners. It is so ordered.
101. Cruz v. Court of Appeals (140 SCRA 245)

G.R. No. L-58671 November 22, 1985


EDUVIGIS J. CRUZ, Petitioner, vs. COURT OF APPEALS, ET AL., Respondents.
PLANA, J.:
This a petition for review of the decision of the defunct Court of Appeals dated August 20,
1981 in CA-G.R. No. 65338-H reversing that of the Court of First Instance of Rizal. and
dismissing petitioner's complaint for revocation of donation against herein private
respondents Teresita, Lydia and all surnamed De Leon.chanroblesvirtualawlibrary chanrobles
virtual law library
In Eduvigis J. Cruz, a childless widow, donated a 235.5 sq.m residential lot in San Isidro,
Taytay Rizal together with the two-door apartment erected thereon to her grandnieces
private respondents herein, in a deed of donation entitled "Kasulatan Sa Kaloobpala". The
property was accordingly transferred to the names of private
respondents.chanroblesvirtualawlibrary chanrobles virtual law library
In 1974, Eduvigis Cruz judicially adopted Cresencia Ocreto, a minor, after which she
extrajudicially tried to revoke the donation, but the donees resisted, alleging that(a) the property in question was co-owned by Eduvigis Cruz and her brother. the late
Maximo Cruz, grandfather of the donees, hence the latter own 1/2 of the property by
inheritance; and chanrobles virtual law library
(b) Eduvigis Cruz owns another property, an agricultural land of more than two hectares
situated in Barrio Dolores, Taytay, Rizal, hence the donation did not impair the presumptive
legitime of the adopted child.
In 1975, petitioner filed a complaint against the donees for revocation of donation in the
Court of First Instance of Rizal (Civil Case No. 21049) invoking Article 760, paragraph 3 of
the New Civil Code, which reads: chanrobles virtual law library
Art. 760, Ever donation inter vivos made by a person having no children or descendants,
legitimate or legitimated by subsequent marriage, or illegitimate, may be revoked or
reduced as provided in the next article, by the happening of any of these events:
xxx xxx xxx

(3) If the donor should subsequently adopt a minor


child.chanroblesvirtualawlibrarychanrobles virtual law library
After trial, the trial court rendered a decision revoking the donation. It did not find merit in
defendants' claim that the lot, by donor and her deceased brother, Maximo Cruz, because
the donor's ownership was deemed admitted by the donees by accepting the deed of
donation. It also rejected defendants' argument that the donation did not impair the
legitime, saying that claim was "beside the point" and did not limit plaintiff's right under Art.
760 of the Civil Code.chanroblesvirtualawlibrarychanrobles virtual law library
On appeal, the Court of Appeals reversed the trial court and dismissed the complaint. It
found that.-chanrobles virtual law library
a) the trial court took into consideration only Article 760 of the Civil Code and ignored
Article 761 which states: " In the cases referred to in the preceding article, the donation
shall be revoked or reduced insofar as it exceeds the portion that may be freely disposed of
by will, taking into account the whole estate of the donor of by will, taking into account the
whole estate of the donor at the time of the birth, appearance or adoption of a
child.chanroblesvirtualawlibrarychanrobles virtual law library
(b) Eduvigis Cruz owns another lot in Dolores Taytay Rizal, although the subject of a
pending litigation valued at P273,420.00 in 1977.chanroblesvirtualawlibrarychanrobles
virtual law library
(c) The donated lot did not belong entirely to Eduvigis as thereof belonged to her brother
Maximo Cruz, grandfather of defendants. 1974 it had a total market value of P17,000. Onehalf thereof was P8,500. Adding thereto a P50,000 value of the apartment house
constructed thereon, the total value of the donation would still be within the free portion of
donor's estate and therefore would not impair the legitime of the adopted
child.chanroblesvirtualawlibrary chanrobles virtual law library
(d) In an action for revocation of donation, the donor has the burden to show that the
donation has impaired the legitime of the subsequent child; but in this case, Eduvigis did
not even allege it in her complaint.chanroblesvirtualawlibrary chanrobles virtual law library
In the instant petition for review, petitioner imputes to the appellate court alleged errors
which boil down to the question as to whether under the facts as established and the law,
the decision under review correctly dismissed the complaint to annul the subject donation.
We hold that it did.chanroblesvirtualawlibrary chanrobles virtual law library
In the case of the subsequent adoption of a minor by one who had previously donated some
or all of his properties to another, the donor may sue for the annulment or reduction of the
donation within four years from the date of adoption, if the donation impairs the legitime of
the adopted, taking into account the whole estate of the donor at the time of the adoption
of the child. (Civil Code, Articles 760, 761 and 763). Of course, the burden of proof is on the
plaintiff-donor, who must allege and establish the requirements prescribed by law, on the
basis of which annulment or reduction of the donation can be
adjudged.chanroblesvirtualawlibrary chanrobles virtual law library

Unfortunately, in the case at bar, the complaint for annulment does not allege that the
subject donation impairs the legitime of the adopted child. Indeed it contains no indication
at all of the total assets of the donor.
Nor is there proof of impairment of legitime. On the contrary, there is unrebutted evidence
that the donor has another piece of land (27,342 sq. m.) situated in Dolores, Taytay, Rizal
worth P273,420.00 in 1977, although then subject to litigation.
The legal situation of petitioner-donor, as plaintiff, is made worse by the factual finding of
the Court of Appeals that the grandfather of the donees was the owner pro indiviso of onehalf of the donated land, the effect of which is to reduce the value of the donation which can
then more easily be taken from the portion of the estate within the free disposal of
petitioner.
WHEREFORE, the decision under review is affirmed. virtual law library
SO ORDERED.
102. Roman Catholic Archbishop of Manila v. CA (198 SCRA 300)180 181
G.R. No. 77425. June 19, 1991.]
THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP
OF IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C.
IGNAO, Petitioners, v. HON. COURT OF APPEALS, THE ESTATE OF DECEASED
SPOUSES EUSEBIO DE CASTRO and MARTINA RIETA, represented by MARINA
RIETA GRANADOS and THERESA RIETA TOLENTINO, Respondents.
[G.R. No. 77450. June 19, 1991.]
THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP
OF IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C.
IGNAO, Petitioners, v. HON. COURT OF APPEALS, THE ESTATE OF DECEASED
SPOUSES EUSEBIO DE CASTRO and MARTINA RIETA, represented by MARINA
RIETA GRANADOS and THERESA RIETA TOLENTINO, Respondents.
Severino C. Dominguez for petitioner Roman Catholic Bishop of Imus, Cavite.
Dolorfino and Dominguez Law Offices for Sps. Ignao.
Joselito R. Enriquez for Private Respondents.
SYLLABUS
1. CIVIL LAW; DEED OF DONATION; WHEN CONTENTS THEREOF PROVIDE FOR AUTOMATIC
REVERSION OF PROPERTY DONATED IN CASE OF VIOLATION OF CONDITIONS SET FORTH
THEREIN, JUDICIAL ACTION FOR RESCISSION, NOT NECESSARY. The deed of donation
involved herein expressly provides for automatic reversion of the property donated in case
of violation of the condition therein, hence a judicial declaration revoking the same is not
necessary. As aptly stated by the Court of Appeals: "By the very express provision in the
deed of donation itself that the violation of the condition thereof would render ipso facto null

and void the deed of donation, WE are of the opinion that there would be no legal necessity
anymore to have the donation judicially declared null and void for the reason that the very
deed of donation itself declares it so. For where (sic) it otherwise and that the donors and
the donee contemplated a court action during the execution of the deed of donation to have
the donation judicially rescinded or declared null and void should the condition be violated,
then the phrase reading would render ipso facto null and void would not appear in the deed
of donation." In support of its aforesaid position, respondent court relied on the rule that a
judicial action for rescission of a contract is not necessary where the contract provides that
it may be revoked and cancelled for violation of any of its terms and conditions. It called
attention to the holding that there is nothing in the law that prohibits the parties from
entering into an agreement that a violation of the terms of the contract would cause its
cancellation even without court intervention, and that it is not always necessary for the
injured party to resort to court for rescission of the contract. It reiterated the doctrine that a
judicial action is proper only when there is absence of a special provision granting the power
of cancellation.
2. ID.; ID.; ID.; DE LUNA, ET AL., v. ABRIGO, ET AL. [181 SCRA 150], APPLICABLE IN CASE
AT BAR; RATIONALE FOR THE RULE. The validity of such a stipulation in the deed of
donation providing for the automatic reversion of the donated property to the donor upon
non-compliance of the condition was upheld in the recent case of De Luna, Et. Al. v. Abrigo,
Et Al., 181 SCRA 150 (1990). It was held therein that said stipulation is in the nature of an
agreement granting a party the right to rescind a contract unilaterally in case of breach,
without need of going to court, and that, upon the happening of the resolutory condition or
non-compliance with the conditions of the contract, the donation is automatically revoked
without need of a judicial declaration to that effect. While what was the subject of that case
was an onerous donation which, under Article 733 of the Civil Code is governed by the rules
on contracts, since the donation in the case at bar is also subject to the same rules because
of its provision on automatic revocation upon the violation of a resolutory condition, from
parity of reasons said pronouncements in De Luna pertinently apply. The rationale for the
foregoing is that in contracts providing for automatic revocation, judicial intervention is
necessary not for purposes of obtaining a judicial declaration rescinding a contract already
deemed rescinded by virtue of an agreement providing for rescission even without judicial
intervention, but in order to determine whether or not the rescission was proper.
3. ID.; ID.; ID.; GENERAL RULES ON CONTRACT AND PRESCRIPTION SHOULD APPLY, NOT
ART. 764 OF THE CODE. When a deed of donation, as in this case, 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 l306 of said Code authorizes the parties to a contract to establish such stipulations,
clauses, terms and conditions not contrary to law, morals, good customs, 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.
4. ID.; ID.; PROHIBITION AGAINST ALIENATION FOR AN UNREASONABLE LENGTH OF TIME;
CONTRARY TO PUBLIC POLICY. The cause of action of private respondents is based on the
alleged breach by petitioners of the resolutory condition in the deed of donation that the
property donated should not be sold within a period of one hundred (100) years from the
date of execution of the deed of donation. Said condition, in our opinion, constitutes an
undue restriction on the rights arising from ownership of petitioners and is, therefore,
contrary to public policy. Donation, as a mode of acquiring ownership, results in an effective

transfer of title over the property from the donor to the donee. Once a donation is accepted,
the donee becomes the absolute owner of the property donated. Although the donor may
impose certain conditions in the deed of donation, the same must not be contrary to law,
morals, good customs, public order and public policy. The condition imposed in the deed of
donation in the case before us constitutes a patently unreasonable and undue restriction on
the right of the donee to dispose of the property donated, which right is an indispensable
attribute of ownership. Such a prohibition against alienation, in order to be valid, must not
be perpetual or for an unreasonable period of time.
5. ID.; ID.; ID.; SHOULD BE DECLARED NULL AND VOID AS AN IMPOSSIBLE CONDITION.
It is significant that the provisions therein regarding a testator also necessarily involve, in
the main, the devolution of property by gratuitous title hence, as is generally the case of
donations, being an act of liberality, the imposition of an unreasonable period of prohibition
to alienate the property should be deemed anathema to the basic and actual intent of either
the donor or testator. For that reason, the regulatory arm of the law is or must be
interposed to prevent an unreasonable departure from the normative policy expressed in
the aforesaid Articles 494 and 870 of the Code. In the case at bar, we hold that the
prohibition in the deed of donation against the alienation of the property for an entire
century, being an unreasonable emasculation and denial of an integral attribute of
ownership, should be declared as an illegal or impossible condition within the contemplation
of Article 727 of the Civil Code. Consequently, as specifically stated in said statutory
provision, such condition shall be considered as not imposed. No reliance may accordingly
be placed on said prohibitory paragraph in the deed of donation. The net result is that,
absent said proscription, the deed of sale supposedly constitutive of the cause of action for
the nullification of the deed of donation is not in truth violative of the latter hence, for lack
of cause of action, the case for private respondents must fail.
6. SUPREME COURT; HAS AUTHORITY TO REVIEW MATTERS EVEN IF THEY ARE NOT
ASSIGNED AS ERRORS ON APPEAL; CASE AT BAR. It will readily be noted that the
provision in the deed of donation against alienation of the land for one hundred (100) years
was the very basis for the action to nullify the deed of donation. At the same time, it was
likewise the controverted fundament of the motion to dismiss the case a quo, which motion
was sustained by the trial court and set aside by respondent court, both on the issue of
prescription. That ruling of respondent court interpreting said provision was assigned as an
error in the present petition. While the issue of the validity of the same provision was not
squarely raised, it is ineluctably related to petitioners aforesaid assignment of error since
both issues are grounded on and refer to the very same provision. This Court is clothed with
ample authority to review matters, even if they are not assigned as errors on appeal, if it
finds that their consideration is necessary in arriving at a just decision of the case. Thus, we
have held that an unassigned error closely related to an error properly assigned, or upon
which the determination of the question properly assigned is dependent, will be considered
by the appellate court notwithstanding the failure to assign it as error.
7. ID.; ID.; FOR THE EXPEDITIOUS ADMINISTRATION OF SUBSTANTIAL JUSTICE, REMAND
OF THE CASE TO THE LOWER COURT FOR FURTHER RECEPTION OF EVIDENCE, NOT
NECESSARY. We have laid down the rule that the remand of the case to the lower court
for further reception of evidence is not necessary where the Court is in a position to resolve
the dispute based on the records before it. On many occasions, the Court, in the public
interest and for the expeditious administration of justice has resolved actions on the merits
instead of remanding them to the trial court for further proceedings, such as where the ends
of justice, would not be subserved by the remand of the case. The aforestated
considerations obtain in and apply to the present case with respect to the matter of the
validity of the resolutory condition in question.

DECISION
REGALADO, J.:
These two petitions for review on certiorari 1 seek to overturn the decision of the Court of
Appeals in CA-G.R. CV No. 05456 2 which reversed and set aside the order of the Regional
Trial Court of Imus, Cavite dismissing Civil Case No. 095-84, as well as the order of said
respondent court denying petitioners motions for the reconsideration of its aforesaid
decision.
On November 29, 1984, private respondents as plaintiffs, filed a complaint for nullification of
deed of donation, rescission of contract and reconveyance of real property with damages
against petitioners Florencio and Soledad C. Ignao and the Roman Catholic Bishop of Imus,
Cavite, together with the Roman Catholic Archbishop of Manila, before the Regional Trial
Court, Branch XX, Imus, Cavite and which was docketed as Civil Case No. 095-84 therein. 3
In their complaint, private respondents alleged that on August 23, 1930, the spouses
Eusebio de Castro and Martina Rieta, now both deceased, executed a deed of donation in
favor of therein defendant Roman Catholic Archbishop of Manila covering a parcel of land
(Lot No. 626, Cadastral Survey of Kawit), located at Kawit, Cavite, containing an area of 964
square meters, more or less. The deed of donation allegedly provides that the donee shall
not dispose or sell the property within a period of one hundred (100) years from the
execution of the deed of donation, otherwise a violation of such condition would render ipso
facto null and void the deed of donation and the property would revert to the estate of the
donors.
It is further alleged that on or about June 30, 1980, and while still within the prohibitive
period to dispose of the property, petitioner Roman Catholic Bishop of Imus, in whose
administration all properties within the province of Cavite owned by the Archdiocese of
Manila was allegedly transferred on April 26, 1962, executed a deed of absolute sale of the
property subject of the donation in favor of petitioners Florencio and Soledad C. Ignao in
consideration of the sum of P114,000.00. As a consequence of the sale, Transfer Certificate
of Title No. 115990 was issued by the Register of Deeds of Cavite on November 15, 1980 in
the name of said petitioner spouses.
What transpired thereafter is narrated by respondent court in its assailed decision. 4 On
December 17, 1984, petitioners Florencio Ignao and Soledad C. Ignao filed a motion to
dismiss based on the grounds that (1) herein private respondents, as plaintiffs therein, have
no legal capacity to sue; and (2) the complaint states no cause of action.
On December 19, 1984, petitioner Roman Catholic Bishop of Imus also filed a motion to
dismiss on three (3) grounds, the first two (2) grounds of which were identical to that of the
motion to dismiss filed by the Ignao spouses, and the third ground being that the cause of
action has prescribed.
On January 9, 1985, the Roman Catholic Archbishop of Manila likewise filed a motion to
dismiss on the ground that he is not a real party in interest and, therefore, the complaint
does not state a cause of action against him.

After private respondents had filed their oppositions to the said motions to dismiss and the
petitioners had countered with their respective replies, with rejoinders thereto by private
respondents, the trial court issued an order dated January 31, 1985, dismissing the
complaint on the ground that the cause of action has prescribed. 5
Private respondents thereafter appealed to the Court of Appeals raising the issues on (a)
whether or not the action for rescission of contracts (deed of donation and deed of sale) has
prescribed; and (b) whether or not the dismissal of the action for rescission of contracts
(deed of donation and deed of sale) on the ground of prescription carries with it the
dismissal of the main action for reconveyance of real property. 6
On December 23, 1986, respondent Court of Appeals, holding that the action has not yet
prescribed, rendered a decision in favor of private respondents, with the following
dispositive portion:chanrobles virtual lawlibrary
"WHEREFORE, the Order of January 31, 1985 dismissing appellants complaint is SET ASIDE
and Civil Case No. 095-84 is hereby ordered REINSTATED and REMANDED to the lower court
for further proceedings. No costs." 7
Petitioners Ignao and the Roman Catholic Bishop of Imus then filed their separate motions
for reconsideration which were denied by respondent Court of Appeals in its resolution dated
February 6, 1987, 8 a hence, the filing of these appeals by certiorari.
It is the contention of petitioners that the cause of action of herein private respondents has
already prescribed, invoking Article 764 of the Civil Code which provides that" (t)he
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," and that" (t)his 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 donees heirs."cralaw virtua1aw
library
We do not agree.
Although it is true that under Article 764 of the Civil Code an action for the revocation of a
donation must be brought within four (4) years from the non-compliance of the conditions
of the donation, the same is not applicable in the case at bar. The deed of donation involved
herein expressly provides for automatic reversion of the property donated in case of
violation of the condition therein, hence a judicial declaration revoking the same is not
necessary. As aptly stated by the Court of Appeals:jgc:chanrobles.com.ph
"By the very express provision in the deed of donation itself that the violation of the
condition thereof would render ipso facto null and void the deed of donation, WE are of the
opinion that there would be no legal necessity anymore to have the donation judicially
declared null and void for the reason that the very deed of donation itself declares it so. For
where (sic) it otherwise and that the donors and the donee contemplated a court action
during the execution of the deed of donation to have the donation judicially rescinded or
declared null and void should the condition be violated, then the phrase reading would
render ipso facto null and void would not appear in the deed of donation." 9
In support of its aforesaid position, respondent court relied on the rule that a judicial action
for rescission of a contract is not necessary where the contract provides that it may be
revoked and cancelled for violation of any of its terms and conditions. 10 It called attention
to the holding that there is nothing in the law that prohibits the parties from entering into

an agreement that a violation of the terms of the contract would cause its cancellation even
without court intervention, and that it is not always necessary for the injured party to resort
to court for rescission of the contract. 11 It reiterated the doctrine that a judicial action is
proper only when there is absence of a special provision granting the power of cancellation.
12
It is true that the aforesaid rules were applied to the contracts involved therein, but we see
no reason why the same should not apply to the donation in the present case. Article 732 of
the Civil Code provides that donations inter vivos shall be governed by the general
provisions on contracts and obligations in all that is not determined in Title III, Book III on
donations. Now, said Title III does not have an explicit provision on the matter of a donation
with a resolutory condition and which is subject to an express provision that the same shall
be considered ipso facto revoked upon the breach of said resolutory condition imposed in
the deed therefor, as is the case of the deed presently in question. The suppletory
application of the foregoing doctrinal rulings to the present controversy is consequently
justified.
The validity of such a stipulation in the deed of donation providing for the automatic
reversion of the donated property to the donor upon non-compliance of the condition was
upheld in the recent case of De Luna, Et. Al. v. Abrigo, Et. Al. 13 It was held therein that
said stipulation is in the nature of an agreement granting a party the right to rescind a
contract unilaterally m case of breach, without need of going to court, and that, upon the
happening of the resolutory condition or non-compliance with the conditions of the contract,
the donation is automatically revoked without need of a judicial declaration to that effect.
While what was the subject of that case was an onerous donation which, under Article 733
of the Civil Code is governed by the rules on contracts, since the donation in the case at bar
is also subject to the same rules because of its provision on automatic revocation upon the
violation of a resolutory condition, from parity of reasons said pronouncements in De Luna
pertinently apply.chanrobles.com : virtual law library
The rationale for the foregoing is that in contracts providing for automatic revocation, judical
intervention is necessary not for purposes of obtaining a judicial declaration rescinding a
contract already deemed rescinded by virtue of an agreement providing for rescission even
without judicial intervention, but in order to determine whether or not the rescission was
proper. 14
When a deed of donation, as in this case, 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, clauses, terms and
conditions not contrary to law, morals, good customs, 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.
On the foregoing ratiocinations, the Court of Appeals committed no error in holding that the
cause of action of herein private respondents has not yet prescribed since an action to
enforce a written contract prescribes in ten (10) years. 15 It is our view that Article 764 was
intended to provide a judicial remedy in case of non-fulfillment or contravention of
conditions specified in the deed of donation if and when the parties have not agreed on the
automatic revocation of such donation upon the occurrence of the contingency contemplated

therein. That is not the situation in the case at bar.


Nonetheless, we find that although the action filed by private respondents may not be
dismissed by reason of prescription, the same should be dismissed on the ground that
private respondents have no cause of action against petitioners.
The cause of action of private respondents is based on the alleged breach by petitioners of
the resolutory condition in the deed of donation that the property donated should not be
sold within a period of one hundred (100) years from the date of execution of the deed of
donation. Said condition, in our opinion, constitutes an undue restriction on the rights
arising from ownership of petitioners and is, therefore, contrary to public policy.
Donation, as a mode of acquiring ownership, results in an effective transfer of title over the
property from the donor to the donee. Once a donation is accepted, the donee becomes the
absolute owner of the property donated. Although the donor may impose certain conditions
in the deed of donation, the same must not be contrary to law, morals, good customs,
public order and public policy. The condition imposed in the deed of donation in the case
before us constitutes a patently unreasonable and undue restriction on the right of the
donee to dispose of the property donated, which right is an indispensable attribute of
ownership. Such a prohibition against alienation, in order to be valid, must not be perpetual
or for an unreasonable period of time.
Certain provisions of the Civil Code illustrative of the aforesaid policy may be considered
applicable by analogy. Under the third paragraph of Article 494, a donor or testator may
prohibit partition for a period which shall not exceed twenty (20) years. Article 870, on its
part, declares that the dispositions of the testator declaring all or part of the estate
inalienable for more than twenty (20) years are void.chanrobles law library
It is significant that the provisions therein regarding a testator also necessarily involve, in
the main, the devolution of property by gratuitous title hence, as is generally the case of
donations, being an act of liberality, the imposition of an unreasonable period of prohibition
to alienate the property should be deemed anathema to the basic and actual intent of either
the donor or testator. For that reason, the regulatory arm of the law is or must be
interposed to prevent an unreasonable departure from the normative policy expressed in
the aforesaid Articles 494 and 870 of the Code.
In the case at bar, we hold that the prohibition in the deed of donation against the alienation
of the property for an entire century, being an unreasonable emasculation and denial of an
integral attribute of ownership, should be declared as an illegal or impossible condition
within the contemplation of Article 727 of the Civil Code. Consequently, as specifically stated
in said statutory provision, such condition shall be considered as not imposed. No reliance
may accordingly be placed on said prohibitory paragraph in the deed of donation. The net
result is that, absent said proscription, the deed of sale supposedly constitutive of the cause
of action for the nullification of the deed of donation is not in truth violative of the latter
hence, for lack of cause of action, the case for private respondents must fail.
It may be argued that the validity of such prohibitory provision in the deed of donation was
not specifically put in issue in the pleadings of the parties. That may be true, but such
oversight or inaction does not prevent this Court from passing upon and resolving the same.
It will readily be noted that the provision in the deed of donation against alienation of the
land for one hundred (100) years was the very basis for the action to nullify the deed of
donation. At the same time, it was likewise the controverted fundament of the motion to

dismiss the case a quo, which motion was sustained by the trial court and set aside by
respondent court, both on the issue of prescription. That ruling of respondent court
interpreting said provision was assigned as an error in the present petition. While the issue
of the validity of the same provision was not squarely raised, it is ineluctably related to
petitioners aforesaid assignment of error since both issues are grounded on and refer to the
very same provision.chanrobles virtual lawlibrary
This Court is clothed with ample authority to review matters, even if they are not assigned
as errors on appeal, if it finds that their consideration is necessary in arriving at a just
decision of the cased: 16 Thus, we have held that an unassigned error closely related to an
error properly assigned, 17 or upon which the determination of the question properly
assigned is dependent, will be considered by the appellate court notwithstanding the failure
to assign it as error. 18
Additionally, we have laid down the rule that the remand of the case to the lower court for
further reception of evidence is not necessary where the Court is in a position to resolve the
dispute based on the records before it. On many occasions, the Court, in the public interest
and for the expeditious administration of justice, has resolved actions on the merits instead
of remanding them to the trial court for further proceedings, such as where the ends of
justice, would not be subserved by the remand of the cased. 19 The aforestated
considerations obtain in and apply to the present case with respect to the matter of the
validity of the resolutory condition in question.
WHEREFORE, the judgment of respondent court is SET ASIDE and another judgment is
hereby rendered DISMISSING Civil Case No. 095-84 of the Regional Trial Court, Branch XX,
Imus, Cavite.
SO ORDERED.
103. Eduarte v. Court of Appeals (253 SCRA 391) 182
G.R. No. 105944. February 9, 1996.]
SPOUSES ROMULO AND SALLY EDUARTE, Petitioners, v. THE HONORABLE COURT
OF APPEALS and PEDRO CALAPINE (substituted by ALEXANDER CALAPINE and
ARTEMIS CALAPINE), Respondents.
Makalintal Barot Torres & Ibarra, for Petitioners.
Roberto E. Gomez for Private Respondents.
SYLLABUS
1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; DONATION; REVOCATION; ALL CRIMES
WHICH OFFEND THE DONOR SHOW INGRATITUDE AND CAUSES REVOCATION. As noted
in Tolentinos Commentaries and Jurisprudence on the Civil Code on paragraph (1) of Article
765 "all crimes which offend the donor show ingratitude and are causes for revocation."
Petitioners attempt to categorize the offenses according to their classification under the
Revised Penal Code is therefore unwarranted considering that illegal detention, threats and
coercion are considered as crimes against the person of the donor despite the fact that they
are classified as crimes against personal liberty and security under the Revised Penal Code.

2. REMEDIAL LAW; EVIDENCE; WEIGHT AND SUFFICIENCY; TESTIMONY OF NBI


HANDWRITING EXPERT GIVEN MORE WEIGHT AND CREDENCE THAN THE TESTIMONY OF
EXPERT FROM THE PC CRIME LABORATORY WHERE THE FORMER WAS COMPLETE,
THOROUGH AND SCIENTIFIC. Respondent Court of Appeals and the trial court cannot be
faulted for giving more weight and credence to the testimony of the NBI handwriting expert
considering that the examination of the said witness proved to be complete, thorough and
scientific. Confronted with contradicting testimonies from two handwriting experts, the trial
court and respondent Court of Appeals were convinced by the opinion of the NBI
handwriting expert as it was more exhaustive, in contrast with the testimony of petitioners
witness from the PCCL which was discarded on account of the several flaws. At the same
time, petitioners witness failed to rebut the convincing testimony of the NBI handwriting
expert presented by private respondents. We therefore find no reason to deviate from the
assailed conclusions as the same are amply supported by the evidence on record.
3. CIVIL LAW; LAND TITLES AND DEED; TORRENS SYSTEM OF LAND REGISTRATION;
POSSESSION CANNOT DEFEAT TITLE. The rule is well-settled that mere possession
cannot defeat the title of a holder of a registered torrens title to real property. Moreover,
reliance on the doctrine that a forged deed can legally be the root of a valid title is squarely
in point in this case.
4. ID.; ID.; ID.; CASE AT BAR. When herein petitioner purchased the subject property
from Helen Doria, the same was already covered by TCT No. T-23205 under the latters
name. And although Helen Dorias title was fraudulently secured, such fact cannot prejudice
the rights of herein petitioners absent any showing that they had any knowledge or
participation in such irregularity. Thus, they cannot be obliged to look beyond the certificate
of title which appeared to be valid on its face and sans any annotation or notice of private
respondents adverse claim.
5. ID.; OBLIGATIONS AND CONTRACTS; SALE; PURCHASER DEEMED IN GOOD FAITH
WHERE DISPUTED PROPERTY WAS BOUGHT WITHOUT NOTICE THAT SOME OTHER PERSON
HAS A RIGHT OR INTEREST IN SUCH PROPERTY. Contrary therefore to the conclusion of
respondent Court, petitioners are purchasers in good faith and for value as they bought the
disputed property without notice that some other person has a right or interest in such
property, and paid a full price for the same at the time of the purchase or before they had
notice of the claim or interest of some other person in the property.
6. ID.; ID.; ID.; INNOCENT PURCHASER FOR VALUE MUST BE RESPECTED AND PROTECTED
DESPITE FRAUD EMPLOYED BY THE SELLER IN SECURING HIS TITLE. Respondent Court
therefore committed a reversible error when it affirmed the ruling of the trial court annulling
and setting aside the deed of absolute sale dated March 25, 1988 between petitioners and
Helen Doria, as well as the Transfer Certificate of Title No. T-27434 issued under petitioners
name, the established rule being that the rights of an innocent purchaser for value must be
respected and protected notwithstanding the fraud employed by the seller in securing his
title.
7. REMEDIAL LAW; ACTIONS; ACTION FOR DAMAGES AGAINST THE TREASURER OF THE
PHILIPPINES, PROPER REMEDY OF TRUE OWNER OF PROPERTY FRAUDULENTLY
DISPOSSESSED OF THE SAME. In this regard, it has been held that the proper recourse
of the true owner of the property who was prejudiced and fraudulently dispossessed of the
same is to bring an action for damages against those who caused or employed the fraud,
and if the latter are insolvent, an action against the Treasurer of the Philippines may be filed
for recovery of damages against the Assurance Fund.

8. ID.; ID.; APPEALS; PERSON WHO FRAUDULENTLY ACQUIRED TITLE OVER DISPUTED
PROPERTY ADJUDGED LIABLE FOR DAMAGES TO TRUE OWNERS. Conformably with the
foregoing, having established beyond doubt that Helen Doria fraudulently secured her title
over the disputed property which she subsequently sold to petitioners, Helen Doria should
instead be adjudged liable to private respondents, and not to petitioners as declared by the
trial court and respondent Court of Appeals, for the resulting damages to the true owner
and original plaintiff, Pedro Calapine.
DECISION
FRANCISCO, J.:
A donation is an act of liberality whereby a person disposes gratuitously of a thing or right in
favor of another, who accepts it. 1 On the part of the donor, it is an exercise of ones
generosity. However, on several occasions, instead of being accorded recognition and
appreciation for this act of beneficence, the donor ends up as a victim of greed and
ingratitude. This was the fate that befell Pedro Calapine (herein original plaintiff)
constraining him to cause the revocation of the donation that he made to his niece in 1984.
The instant petition for certiorari is interposed by the spouses Romulo and Sally Eduarte,
assailing the decision of the Court of Appeals in CA-G.R. CV No. 29175 which affirmed the
revocation of the donation made by Pedro Calapine to his niece, Helen Doria, and at the
same time declared petitioners as purchasers in bad faith of the property donated.
As set out in the appealed decision, the undisputed facts are as
follows:jgc:chanrobles.com.ph
"Pedro Calapine was the registered owner of a parcel of land located in San Cristobal, San
Pablo City, with an area of 12,199 square meters, as evidenced by Original Certificate of
Title No. P-2129 (Exhibits A and 1). On April 26, 1984, he executed a deed entitled
Pagbibigay-Pala (Donacion Inter-Vivos) ceding one-half portion thereof to his niece Helen
S. Doria (Exhibit B).
"On July 26, 1984, another deed identically entitled was purportedly executed by Pedro
Calapine ceding unto Helen S. Doria the whole of the parcel of land covered by OCT No. P2129 (Exhibits C and D), on the basis of which said original certificate was cancelled and in
lieu thereof Transfer Certificate of Title No. T-23205 was issued in her name (Exhibits G and
2).
"On February 26, 1986, Helen S. Doria donated a portion of 157 square meters of the parcel
of land covered by TCT No. T-23205 to the Calauan Christian Reformed Church, Inc. (Exhibit
H), on the basis of which said transfer certificate of title was cancelled and TCT No. T-24444
was issued in its name covering 157 square meters (Exhibit 2-A) and TCT No. T-24445, in
the name of Helen S. Doria covering the remaining portion of 12,042 square meters (Exhibit
3).
"On March 25, 1988, Helen S. Doria sold, transferred and conveyed unto the spouses
Romulo and Sally Eduarte the parcel of land covered by TCT No. T-24445, save the portion
of 700 square meters on which the vendors house had been erected (Exhibits 1 and 3-f),
on the basis of which TCT No. 24445 was cancelled and in lieu thereof TCT No. T-27434,
issued in the name of the vendees (Exhibit 4).

"Claiming that his signature to the deed of donation (Exhibits C and D) was a forgery and
that she was unworthy of his liberality, Pedro Calapine brought suit against Helen S. Doria,
the Calauan Christian Reformed Church, Inc. and the spouses Romulo and Sally Eduarte to
revoke the donation made in favor of Helen S. Doria (Exhibit B), to declare null and void the
deeds of donation and sale that she had executed in favor of the Calauan Christian
Reformed Church, Inc. and the spouses Romulo and Sally Eduarte (Exhibits H, l and 3-F)
and to cancel TCT Nos. T-24444, 24445 and T-27434.
"Answering the complaint, the defendants spouses denied knowledge of the first deed of
donation and alleged that after a part of the property was donated to the defendant Calauan
Christian Reformed Church, Inc., the remaining portion thereof was sold to them by the
defendant Helen S. Doria; and that the plaintiffs purported signature in the second deed of
donation was his own, hence genuine. They prayed that the complaint against them be
dismissed; that upon their counterclaim, the plaintiff be ordered to pay them moral and
exemplary damages and attorneys fees; and that upon their cross-claim the defendant
Helen S. Doria be ordered to reimburse them the purchase price of 12110,000 and to pay
them moral and exemplary damages and attorneys fees (pp. 23-31, rec.).
"The defendant Calauan Christian Reformed Church, Inc. manifested in its answer the
willingness to reconvey to the plaintiff that part of the property donated to it by Helen S.
Doria (pp. 36-38, rec.). And having executed the corresponding deed of reconveyance, the
case as against it was dismissed (pp. 81-83; 84, rec.).
"The defendants Helen S. Doria and the City Assessor and the Registrar of Deeds of San
Pablo City did not file answers to the plaintiffs complaint.
"After the plaintiffs death on August 27, 1989, on motion, he was substituted by his
nephews Alexander and Artemis Calapine upon order of the Court (pp. 147-152; 250, rec.).
"After trial, the Regional Trial Court, Fourth Judicial Region, Branch 30, San Pablo City
rendered judgment, the dispositive part of which provides:chanrob1es virtual 1aw library
WHEREFORE, premises considered, judgment is hereby rendered by the Court in the instant
case in favor of plaintiff and against defendant Eduartes to wit:chanrob1es virtual 1aw
library
1. DECLARING as it is hereby declared, the revocation of the Deed of Donation dated April
26, 1984;
2. ANNULLING, voiding, setting aside and declaring of no force and effect the Deed of
Donation dated July 26, 1984, the deed of absolute sale executed on March 25, 1988 by and
between spouses Eduartes and Helen Doria, and the Transfer Certificate of Title No- T-27434
issued under the name of spouses Romulo and Sally Eduarte;
3. ORDERING the office of the Register of Deeds, San Pablo City, to cancel TCT No. T-27434
or any other adverse title emanating from OCT No. P-2129 and in lieu thereof, to issue a
new transfer certificate of title covering the subject property under the names of the
substitute-plaintiffs Alexander and Artemis both surnamed Calapine, after payment of the
corresponding fees and taxes therefor; and
4. ORDERING defendant Helen Doria to pay substitute-plaintiffs the sum of F220,000.00 as
and for attorneys fees.

Judgment on the cross-claim of defendant Eduartes against Helen Doria is further rendered
by ordering the latter to pay the former the sum of P110,000.00 with legal interest thereon
starting from March 25, 1988 until full payment, and the further sum of P20,000.00 as and
for attorneys fees.
The counterclaim of defendant Eduartes against plaintiff is hereby dismissed for lack of
merit
Costs against defendant Helen Doria in both the complaint and the cross-claim)pp. 11-12,
decision, pp. 264-265, rec.).
"Only the defendants Eduarte spouses took an appeal (p. 266, rec.), claiming that the trial
court erred
1. In annulling, voiding, setting aside, and declaring of no force and effect
(a) the deed of donation (Exhibit C and 1-A), dated July 26, 1984;
(b) the deed of absolute sale (Exhibit 1 and 3-E) executed on March 25, 1988 by and
between Spouses Eduartes and Helen Doria;
(c) TCT No. T-27434 (Exhibit 4) issued in the name of spouses Romulo Eduarte and Sally
Eduarte; and
in revoking the deed of donation (Exhibit B) dated April 26, 1984;
2. In declaring the appellants Eduartes buyers in bad faith;
3. In not finding the plaintiffs guilty of estoppel by silence and/or guilty of suppression of
evidence instead of finding the appellants Eduartes guilty of suppression of evidence; and
4. In finding that the signature of Pedro Calapine in the deed of donation (Exhibits C and 1A) dated July 26, 1984 a forgery based on the opposite findings of the hand writing experts
presented by each party and in the absence of the testimony of Pedro Calapine who was
then still alive (pp. 1-2, appellants brief.)" 2
In its decision dated April 22, 1992, 3 respondent Court of Appeals dismissed petitioners
appeal and affirmed the decision of the trial court. Respondent court was in complete accord
with the trial court in giving more credence to the testimony of private respondents expert
witness, NBI document examiner Bienvenido Albacea, who found Pedro Calapines signature
in the second deed of donation to be a forgery. It also ruled that by falsifying Pedro
Calapines signature, Helen Doria committed an act of ingratitude which is a valid ground for
revocation of the donation made in her favor in accordance with Article 765 of the Civil
Code. Furthermore, respondent court upheld the trial courts finding that petitioners are not
buyers in good faith of the donated property as they failed to exercise due diligence in
verifying the true ownership of the property despite the existence of circumstances that
should have aroused their suspicions.
Petitioners are now before us taking exception to the foregoing findings of respondent Court
of Appeals and contending that the same are not in accord with the law and evidence on
record.

Anent the revocation of the first deed of donation, petitioners submit that paragraph (1) of
Article 765 of the Civil Code does not apply in this case because the acts of ingratitude
referred to therein pertain to offenses committed by the donee against the person or
property of the donor. Petitioners argue that as the offense imputed to herein donee Helen
Doria falsification of a public document is neither a crime against the person nor property
of the donor but is a crime against public interest under the Revised Penal Code, the same is
not a ground for revocation.
In support of this contention, petitioners cite the following portions found in Tolentinos
Commentaries and Jurisprudence on the Civil Code:jgc:chanrobles.com.ph
"Offense against Donor . . . The crimes against the person of the donor would include not
only homicide and physical injuries, but also illegal detention, threats and coercion; and
those against honor include offenses against chastity and those against the property, include
robbery, theft, usurpation, swindling, arson, damages, etc. (5 Manresa 175-176)." 4
This assertion, however, deserves scant consideration. The full text of the very same
commentary cited by petitioners belies their claim that falsification of the deed of donation
is not an act of ingratitude, to wit:jgc:chanrobles.com.ph
"Offense Against Donor. All crimes which offend the donor show ingratitude and are
causes for revocation. There is no doubt, therefore, that the donee who commits adultery
with the wife of the donor, gives cause for revocation by reason of ingratitude. The crimes
against the person of the donor would include not only homicide and physical injuries, but
also illegal detention, threats, and coercion; those against honor include offenses against
chastity; and those against the property, include robbery, theft, usurpation, swindling,
arson, damages, etc. [Manresa 175-176]." 5 (Emphasis supplied).
Obviously, the first sentence was deleted by petitioners because it totally controverts their
contention. As noted in the aforecited opinion "all crimes which offend the donor show
ingratitude and are causes for revocation." Petitioners attempt to categorize the offenses
according to their classification under the Revised Penal Code is therefore unwarranted
considering that illegal detention, threats and coercion are considered as crimes against the
person of the donor despite the fact that they are classified as crimes against personal
liberty and security under the Revised Penal Code. 6
Petitioners also impute grave error to respondent Court of Appeals in finding that the second
deed of donation dated July 26, 1984 was falsified. Petitioners deplore the fact that more
credence was given to the testimony of the NBI handwriting expert who found Pedro
Calapines signature in the second deed of donation to be a forgery despite the existence of
controverting testimony by PC-INP Crime Laboratory (PCCL) Chief Document Examiner
which petitioners adduced as evidence on their part.
We are not persuaded. Respondent Court of Appeals and the trial court cannot be faulted for
giving more weight and credence to the testimony of the NBI handwriting expert
considering that the examination of the said witness proved to be complete, thorough and
scientific.
In gauging the relative weight to be given to the opinion of handwriting experts, we adhere
to the following standards:jgc:chanrobles.com.ph
"We have held that the value of the opinion of a handwriting expert depends not upon his
mere statements of whether a writing is genuine or false, but upon the assistance he may

afford in pointing out distinguishing marks, characteristics and discrepancies in and between
genuine and false specimens of writing which would ordinarily escape notice or detection
from an unpracticed observer. The test of genuineness ought to be the resemblance, not the
formation of letters in some other specimens but to the general character of writing, which
is impressed on it as the involuntary and unconscious result of constitution, habit or other
permanent course, and is, therefore itself permanent." 7 Confronted with contradicting
testimonies from two handwriting experts, the trial court and respondent Court of Appeals
were convinced by the opinion of the NBI handwriting expert as it was more exhaustive, in
contrast with the testimony of petitioners witness from the PCCL which was discarded on
account of the following flaws:jgc:chanrobles.com.ph
"The Court is not convinced with Cruzs explanations. Apart from the visual inconsistencies,
i. e., the strokes with which some letters were made, the variety in the sizes of the letters,
the depth, the difference in the slant which the Court itself observed in its own examination
of both the questioned signatures and those standard specimen signatures, there is
evidence showing that Cruz did not make a thorough examination of all the signatures
involved in this particular issue. Thus even in the report submitted by the PCCL it was
admitted that they omitted or overlooked the examination of at least three (3) standard
specimen signatures of Pedro Calapine which were previously subject of the NBI
examination marked as Exhibits S-9, S-10 and S-11. When questioned regarding this
oversight, Cruz testified that in his opinion, the inclusion or non-inclusion of said exhibits in
their examination will not affect the same and they would have arrived at the same
conclusion anyway. Again, when asked why they did not bother to have the original copies
of the documents being questioned (Exhs.Q-1 through Q-3) for their examination, Cruz
replied that they are using a special film so it will not matter whether the documents being
examined are the original or a mere photocopy (TSN 8, 10, 12 and 26, Hearing of Nov. 23,
1989).
"The Court will not attempt to make its own conclusion or resolution on such a technical
issue as the matter at hand in the light of the cavalier attitude of Cruz. In fine, between the
examinations made by the two witnesses, that of Albaceas proved to be complete, thorough
and scientific and is worthy of credence and belief." 8
The afore-quoted findings confirm beyond doubt the failure of petitioners expert witness to
satisfy the above-mentioned criteria for evaluating the opinion of handwriting experts. At
the same time, petitioners witness failed to rebut the convincing testimony of the NBI
handwriting expert presented by private respondents. We therefore find no reason to
deviate from the assailed conclusions as the same are amply supported by the evidence on
record.
Finally, proceeding to the crucial issue that directly affects herein petitioners, it is reiterated
that petitioners are buyers in good faith of the donated property, and therefore, it was grave
error to annul and set aside the deed of sale executed between petitioners and donee Helen
Doria.
In adjudging petitioners as buyers in bad faith, respondent Court of Appeals affirmed the
trial courts finding that the attendant circumstances, that is, the presence of other
occupants as well as houses built of strong materials and fruit bearing trees in the subject
land, should have aroused the suspicion of petitioners and impelled them to exercise due
diligence in verifying the true ownership of the property being sold. Petitioners dispute the
lower courts conclusion and argue that although there were other occupants in the subject
property, no adverse claim was made by the latter as they were mere tenants therein, thus,
petitioners were not obliged to make any further inquiry because the property being sold

was covered by a certificate of title under Helen Dorias name.


We agree with petitioners. The rule is well-settled that mere possession cannot defeat the
title of a holder of a registered torrens title to real property. 9 Moreover, reliance on the
doctrine that a forged deed can legally be the root of a valid title is squarely in point in this
case:jgc:chanrobles.com.ph
"Although generally a forged or fraudulent deed is a nullity and conveys no title, however
there are instances when such a fraudulent document may become the root of a valid title.
One such instance is where the certificate of title was already transferred from the name of
the true owner to the forger, and while it remained that way, the land was subsequently sold
to an innocent purchaser. For then, the vendee had the right to rely upon what appeared in
the certificate.
"Where there was nothing in the certificate of title to indicate any cloud or vice in the
ownership of the property, or any encumbrance thereon, the purchaser is not required to
explore further than what the Torrens Title upon its face indicates in quest for any hidden
defect or inchoate right that may subsequently defeat his right thereto. If the rule were
otherwise, the efficacy and conclusiveness of the certificate of title which the Torrens
System seeks to insure would entirely be futile and nugatory." 10
When herein petitioners purchased the subject property from Helen Doria, the same was
already covered by TCT No. T-23205 under the latters name. And although Helen Dorias
title was fraudulently secured, such fact cannot prejudice the rights of herein petitioners
absent any showing that they had any knowledge or participation in such irregularity. Thus,
they cannot be obliged to look beyond the certificate of title which appeared to be valid on
its face and sans any annotation or notice of private respondents adverse claim. Contrary
therefore to the conclusion of respondent Court, petitioners are purchasers in good faith and
for value as they bought the disputed property without notice that some other person has a
right or interest in such property, and paid a full price for the same at the time of the
purchase or before they had notice of the claim or interest of some other person in the
property. 11
Respondent Court therefore committed a reversible error when it affirmed the ruling of the
trial court annulling and setting aside the deed of absolute sale dated March 25, 1988
between petitioners and Helen Doria, as well as the Transfer Certificate of Title No. T-27434
issued under petitioners name, the established rule being that the rights of an innocent
purchaser for value must be respected and protected notwithstanding the fraud employed
by the seller in securing his title. 12
In this regard, it has been held that the proper recourse of the true owner of the property
who was prejudiced and fraudulently dispossessed of the same is to bring an action for
damages against those who caused or employed the fraud, and if the latter are insolvent, an
action against the Treasurer of the Philippines may be filed for recovery of damages against
the Assurance Fund. 13
Conformably with he foregoing, having established beyond doubt that Helen Doria
fraudulently secured her title over the disputed property which she subsequently sold to
petitioners, Helen Doria should instead be adjudged liable to private respondents, and not to
petitioners as declared by the trial court and respondent Court of Appeals, for the resulting
damages to the true owner and original plaintiff, Pedro Calapine.
ACCORDINGLY, the petition is GRANTED and the appealed decision is hereby MODIFIED. The

portions of the decision of the Regional Trial Court of San Pablo City, Branch 30, as affirmed
by the Court of Appeals in CA-G.R. CV No. 29175 which ordered the
following:jgc:chanrobles.com.ph
"x

"2. ANNULLING, voiding, setting aside and declaring of no force and effect . . ., the deed of
absolute sale executed on March 25, 1988 by and between spouses Eduartes and Helen
Doria, and the Transfer Certificate of Title No T-27434 issued under the name of spouses
Romulo and Sally Eduarte;
"3. ORDERING the office of the Register of Deeds, San Pablo City, to cancel TCT No. T-27434
or any other adverse title emanating from OCT No. P-2129 and in lieu thereof, to issue a
new transfer certificate of title covering the subject property under the names of the
substitute-plaintiffs Alexander and Artemis both surnamed Calapine, after payment of the
corresponding fees and taxes therefor: and
"4 . . .
"Judgment on the cross-claim of defendant Eduartes against Helen Doria is further rendered
by ordering the latter to pay the former the sum of P110,000.00 with legal interest thereon
starting from March 25, 1988 until full payment, . . ."cralaw virtua1aw library
are hereby REVERSED and SET ASIDE.
Instead, Helen Doria is hereby ordered to pay herein private respondents the sum of
P110,000.00 with legal interest counted from March 25, 1988 until full payment, as
damages for the resulting loss to original plaintiff Pedro Calapine.
In all other respects, the appealed decision is hereby affirmed.
SO ORDERED.
104. Quilala v. Alcantara (371 SCRA 311)183
G.R. No. 132681. December 3, 2001.]
RICKY Q. QUILALA, Petitioner, v. GLICERIA ALCANTARA, LEONORA ALCANTARA,
INES REYES and JOSE REYES, Respondent.
DECISION
YNARES-SANTIAGO, J.:
On February 20, 1981, Catalina Quilala executed a "Donation of Real Property Inter Vivos"
in favor of Violeta Quilala over a parcel of land located in Sta. Cruz, Manila, containing an
area of 94 square meters, and registered in her name under Transfer Certificate of Title No.
17214 of the Register of Deeds for Manila.chanrob1es virtua1 1aw 1ibrary
The "Donation of Real Property Inter Vivos" consists of two pages. The first page contains
the deed of donation itself, and is signed on the bottom portion by Catalina Quilala as donor,
Violeta Quilala as donee, and two instrumental witnesses. 1 The second page contains the

Acknowledgment, which states merely that Catalina Quilala personally appeared before the
notary public and acknowledged that the donation was her free and voluntary act and deed.
There appear on the left-hand margin of the second page the signatures of Catalina Quilala
and one of the witnesses, and on the right-hand margin the signatures of Violeta Quilala
and the other witness. 2 The Acknowledgment reads:chanrob1es virtual 1aw library
REPUBLIC OF THE PHILIPPINES)
QUEZON CITY) S.S.
Before Me, a Notary Public, for and in the City of Quezon, Philippines, this 20th day of Feb.
1981, personally appeared CATALINA QUILALA, with Residence Certificate No. 19055265
issued at Quezon City on February 4, 1981, known to me and to me known to be the same
person who executed the foregoing instruments and acknowledged to me that the same is
her own free and voluntary act and deed.
I hereby certify that this instrument consisting of two (2) pages, including the page on
which this acknowledgment is written, has been signed by CATALINA QUILALA and her
instrumental witnesses at the end thereof and on the left-hand margin of page 2 and both
pages have been sealed with my notarial seal.
In witness whereof, I have hereunto set my hand, in the City of Quezon, Philippines, this
20th day of Feb., 1981.
(SGD.) NOTARY PUBLIC
Until December 31, 1981
(illegible)
DOC NO. 22;
PAGE NO. 6;
BOOK NO. XV;
SERIES OF 1981.
The deed of donation was registered with the Register of Deeds and, in due course, TCT No.
17214 was cancelled and TCT No. 143015 was issued in the name of Violeta Quilala.
On November 7, 1983, Catalina Quilala died. Violeta Quilala likewise died on May 22, 1984.
Petitioner Ricky Quilala alleges that he is the surviving son of Violeta Quilala.
Meanwhile, respondents Gliceria Alcantara, Leonora Alcantara, Ines Reyes and Juan Reyes,
claiming to be Catalinas only surviving relatives within the fourth civil degree of
consanguinity, executed a deed of extrajudicial settlement of estate, dividing and
adjudicating unto themselves the above-described property.
On September 13, 1984, respondents instituted against petitioner and Guillermo T. San
Pedro, the Registrar of Deeds of Manila, an action for the declaration of nullity of the
donation inter vivos, and for the cancellation of TCT No. 143015 in the name of Violeta
Quilala. The case was docketed as Civil Case No. 84-26603 of the Regional Trial Court of

Manila, Branch 17. Subsequently, respondents withdrew their complaint as against


Guillermo T. San Pedro and he was dropped as a party-defendant.
The trial court found that the deed of donation, although signed by both Catalina and
Violeta, was acknowledged before a notary public only by the donor, Catalina. Consequently,
there was no acceptance by Violeta of the donation in a public instrument, thus rendering
the donation null and void. Furthermore, the trial court held that nowhere in Catalinas SSS
records does it appear that Violeta was Catalinas daughter. Rather, Violeta was referred to
therein as an adopted child, but there was no positive evidence that the adoption was legal.
On the other hand, the trial court found that respondents were first cousins of Catalina
Quilala. However, since it appeared that Catalina died leaving a will, the trial court ruled that
respondents deed of extrajudicial settlement can not be registered. The trial court rendered
judgment as follows:chanrob1es virtua1 1aw 1ibrary
WHEREFORE, judgment is hereby rendered in favor of plaintiffs Gliceria Alcantara, Leonarda
Alcantara, Ines Reyes and Juan Reyes and against defendant Ricky A. Quilala, as
follows:chanrob1es virtual 1aw library
1. Declaring null and void the deed of donation of real property inter vivos executed on
February 20, 1981 by Catalina Quilala in favor of Violeta Quilala (Exhs. A as well as 11 and
11-A.);
2. Ordering the Register of Deeds of Manila to cancel Transfer Certificate of Title No. 143015
in the name of Violeta Quilala and to issue a transfer certificate of title in the name of the
Estate of Catalina Quilala;.
3. Dismissing the complaint insofar as it seeks the registration of the deed of extrajudicial
settlement (Exhs. B and B-1,) and the issuance by the Register of Deeds of Manila of a
transfer certificate of title in the names of the plaintiffs; and
4. Dismissing the counterclaim of defendant Ricky A. Quilala.
No costs.
SO ORDERED. 3
Petitioner appealed the aforesaid decision. On July 30, 1997, the Court of Appeals rendered
a decision affirming with modification the decision of the trial court by dismissing the
complaint for lack of cause of action without prejudice to the filing of probate proceedings of
Catalinas alleged last will and testament. 4
WHEREFORE, the appealed decision is hereby AFFIRMED with the following
MODIFICATION:chanrob1es virtual 1aw library
(3) DISMISSING the complaint for lack of cause of action without prejudice to the filing of
the necessary probate proceedings by the interested parties so as not to render nugatory
the right of the lawful heirs.
Petitioner filed a motion for reconsideration, which the Court of Appeals denied on February
11, 1998. 5 Hence, this petition for review, raising the following assignment of
errors:chanrob1es virtual 1aw library
A. THE COURT OF APPEALS ERRED IN RULING THAT THE DEED OF DONATION OF REAL

PROPERTY INTER-VIVOS IS NOT REGISTRABLE.


B. THE COURT OF APPEALS ERRED ON UPHOLDING THE LOWER COURTS RULING THAT
VIOLETA QUILALA IS NOT THE DAUGHTER OF CATALINA QUILALA. 6
The principal issue raised is the validity of the donation executed by Catalina in favor of
Violeta. Under Article 749 of the Civil Code, the donation of an immovable must be made in
a public instrument in order to be valid, 7 specifying therein the property donated and the
value of the charges which the donee must satisfy. As a mode of acquiring ownership,
donation results in an effective transfer of title over the property from the donor to the
donee, 8 and is perfected from the moment the donor knows of the acceptance by the
donee, 9 provided the donee is not disqualified or prohibited by law from accepting the
donation. Once the donation is accepted, it is generally considered irrevocable, 10 and the
donee becomes the absolute owner of the property. 11 The acceptance, to be valid, must be
made during the lifetime of both the donor and the donee. 12 It may be made in the same
deed or in a separate public document, 13 and the donor must know the acceptance by the
donee. 14
In the case at bar, the deed of donation contained the number of the certificate of title as
well as the technical description of the real property donated. It stipulated that the donation
was made for and in consideration of the "love and affection which the DONEE inspires in
the DONOR, and as an act of liberality and generosity." 15 This was sufficient cause for a
donation. Indeed, donation is legally defined as "an act of liberality whereby a person
disposes gratuitously of a thing or right in favor of another, who accepts it." 16
The donees acceptance of the donation was explicitly manifested in the penultimate
paragraph of the deed, which reads:chanrob1es virtua1 1aw 1ibrary
That the DONEE hereby receives and accepts the gift and donation made in her favor by the
DONOR and she hereby expresses her appreciation and gratefulness for the kindness and
generosity of the DONOR. 17
Below the terms and stipulations of the donation, the donor, donee and their witnesses
affixed their signature. However, the Acknowledgment appearing on the second page
mentioned only the donor, Catalina Quilala. Thus, the trial court ruled that for Violetas
failure to acknowledge her acceptance before the notary public, the same was set forth
merely on a private instrument, i.e., the first page of the instrument. We disagree.
The pertinent provision is Section 112, paragraph 2 of Presidential Decree No. 1529, which
states:chanrob1es virtual 1aw library
Deeds, conveyances, encumbrances, discharges, powers of attorney and other voluntary
instruments, whether affecting registered or unregistered land, executed in accordance with
law in the form of public instruments shall be registrable: Provided, that, every such
instrument shall be signed by person or persons executing the same in the presence of at
least two witnesses who shall likewise sign thereon, and shall be acknowledged to be the
free act and deed of the person or persons executing the same before a notary public or
other public officer authorized by law to take acknowledgment. Where the instrument so
acknowledged consists of two or more pages including the page whereon acknowledgment
is written, each page of the copy which is to be registered in the office of the Register of
Deeds, or if registration is not contemplated, each page of the copy to be kept by the notary
public, except the page where the signatures already appear at the foot of the instrument
shall be signed on the left margin thereof by the person or persons executing the

instrument and their witnesses, and all the pages sealed with the notarial seal, and this fact
as well as the number of pages shall be stated in the acknowledgment. Where the
instrument acknowledged relates to a sale, transfer, mortgage or encumbrance of two or
more parcels of land, the number thereof shall likewise be set forth in said
acknowledgment." (Emphasis supplied).
As stated above, the second page of the deed of donation, on which the Acknowledgment
appears, was signed by the donor and one witness on the left-hand margin, and by the
donee and the other witness on the right hand margin. Surely, the requirement that the
contracting parties and their witnesses should sign on the left-hand margin of the
instrument is not absolute. The intendment of the law merely is to ensure that each and
every page of the instrument is authenticated by the parties. The requirement is designed
to avoid the falsification of the contract after the same has already been duly executed by
the parties. Hence, a contracting party affixes his signature on each page of the instrument
to certify that he is agreeing to everything that is written thereon at the time of signing.
Simply put, the specification of the location of the signature is merely directory. The fact
that one of the parties signs on the wrong side of the page does not invalidate the
document. The purpose of authenticating the page is served, and the requirement in the
above-quoted provision is deemed substantially complied with.
In the same vein, the lack of an acknowledgment by the donee before the notary public
does not also render the donation null and void. The instrument should be treated in its
entirety. It cannot be considered a private document in part and a public document in
another part. The fact that it was acknowledged before a notary public converts the deed of
donation in its entirety a public instrument. The fact that the donee was not mentioned by
the notary public in the acknowledgment is of no moment. To be sure, it is the conveyance
that should be acknowledged as a free and voluntary act. In any event, the donee signed on
the second page, which contains the Acknowledgment only. Her acceptance, which is
explicitly set forth on the first page of the notarized deed of donation, was made in a public
instrument.
It should be stressed that this Court, not being a trier of facts, can not make a
determination of whether Violeta was the daughter of Catalina, or whether petitioner is the
son of Violeta. These issues should be ventilated in the appropriate probate or settlement
proceedings affecting the respective estates of Catalina and Violeta. Suffice it to state that
the donation, which we declare herein to be valid, will still be subjected to a test on its
inofficiousness under Article 771, 18 in relation to Articles 752, 911 and 912 of the Civil
Code. Moreover, property donated inter vivos is subject to collation after the donors death,
19 whether the donation was made to a compulsory heir or a stranger, 20 unless there is an
express prohibition if that had been the donors intention. 21chanrob1es virtua1 1aw 1ibrary
WHEREFORE, in view of the foregoing, the petition is GRANTED. The appealed decision of
the Court of Appeals , is REVERSED and SET ASIDE, and a new judgment is rendered
dismissing Civil Case No. 84-26603.
SO ORDERED.

105. Hemedes v. Court of Appeals (316 SCRA 347)184


G.R. No. 107132. October 8, 1999.]

MAXIMA HEMEDES, Petitioner, v. THE HONORABLE COURT OF APPEALS,


DOMINIUM REALTY AND CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES,
and R & B INSURANCE CORPORATION, Respondents.
[G.R. No. 108472. October 8, 1999.]
R & B INSURANCE CORPORATION, Petitioner, v. THE HONORABLE COURT OF
APPEALS DOMINIUM REALTY AND CONSTRUCTION CORPORATION, ENRIQUE D.
HEMEDES and MAXIMA HEMEDES, Respondents.
DECISION
GONZAGA-REYES, J.:
Assailed in these petitions for review on certiorari is the decision 1 of the eleventh division
of the Court of Appeals in CA-G.R. CV No. 22010 promulgated on September 11, 1992
affirming in toto the decision of Branch 24 of the Regional Trial Court of Laguna in Civil Case
No. B-1766 dated February 22, 1989, 2 and the resolution dated December 29, 1992
denying petitioner R & B Insurance Corporations (R & B Insurance) motion for
reconsideration. As the factual antecedents and issues are the same, we shall decide the
petitions jointly.
The instant controversy involves a question of ownership over an unregistered parcel of
land, identified as Lot No. 6, plan Psu-111331, with an area of 21,773 square meters,
situated in Sala, Cabuyao, Laguna. It was originally owned by the late Jose Hemedes, father
of Maxima Hemedes and Enrique D. Hemedes. On March 22, 1947 Jose Hemedes executed
a document entitled "Donation Inter Vivos With Resolutory Conditions" 3 whereby he
conveyed ownership over the subject land, together with all its improvements, in favor of
his third wife, Justa Kauapin, subject to the following resolutory conditions:chanrob1es
virtual 1aw library
(a) Upon the death or remarriage of the DONEE, the title to the property donated shall
revert to any of the children, or their heirs, of the DONOR expressly designated by the
DONEE in a public document conveying the property to the latter; or
(b) In absence of such an express designation made by the DONEE before her death or
remarriage contained in a public instrument as above provided, the title to the property
shall automatically revert to the legal heirs of the DONOR in common.
Pursuant to the first condition abovementioned, Justa Kausapin executed on September 27,
1960 a "Deed of Conveyance of Unregistered Real Property by Reversion" 4 conveying to
Maxima Hemedes the subject property under the following terms
That the said parcel of land was donated unto me by the said Jose Hemedes, my deceased
husband, in a deed of "DONATION INTER VIVOS WITH RESOLUTORY CONDITIONS"
executed by the donor in my favor, and duly accepted by me on March 22, 1947, before
Notary Public Luis Bella in Cabuyao, Laguna;
That the donation is subject to the resolutory conditions appearing in the said deed of
"DONATION INTER VIVOS WITH RESOLUTORY CONDITIONS," as
follows:jgc:chanrobles.com.ph

"(a) Upon the death or remarriage of the DONEE, the title to the property donated shall
revert to any of the children, or their heirs, of the DONOR expressly designated by the
DONEE in a public document conveying the property to the latter; orcralawnad
(b) In absence of such an express designation made by the DONEE before her death or
remarriage contained in a public instrument as above provided, the title to the property
shall automatically revert to the legal heirs of the DONOR in common."cralaw virtua1aw
library
That, wherefore, in virtue of the deed of donation above mentioned and in the exercise of
my right and privilege under the terms of the first resolutory condition therein contained
and hereinabove reproduced, and for and in consideration of my love and affection, I do
hereby by these presents convey, transfer, and deed unto my designee, MAXIMA HEMEDES,
of legal age, married to RAUL RODRIGUEZ, Filipino and resident of No. 15 Acacia Road,
Quezon City, who is one of the children and heirs of my donor, JOSE HEMEDES, the
ownership of, and title to the property hereinabove described, and all rights and interests
therein by reversion under the first resolutory condition in the above deed of donation;
Except the possession and enjoyment of the said property which shall remain vested in me
during my lifetime, or widowhood and which upon my death or remarriage shall also
automatically revert to, and be transferred to my designee, Maxima Hemedes.
Maxima Hemedes, through her counsel, filed an application for registration and confirmation
of title over the subject unregistered land. Subsequently, Original Certificate of Title (OCT)
No. (0-941) 0-198 5 was issued in the name of Maxima Hemedes married to Raul Rodriguez
by the Registry of Deeds of Laguna on June 8, 1962, with the annotation that "Justa
Kausapin shall have the usufructuary rights over the parcel of land herein described during
her lifetime or widowhood."cralaw virtua1aw library
It is claimed by R & B Insurance that on June 2, 1964, Maxima Hemedes and her husband
Raul Rodriguez constituted a real estate mortgage over the subject property in its favor to
serve as security for a loan which they obtained in the amount of P6,000.00. On February
22, 1968, R & B Insurance extrajudicially foreclosed the mortgage since Maxima Hemedes
failed to pay the loan even after it became due on August 2, 1964. The land was sold at a
public auction on May 3, 1968 with R & B Insurance as the highest bidder and a certificate
of sale was issued by the sheriff in its favor. Since Maxima Hemedes failed to redeem the
property within the redemption period, R & B Insurance executed an Affidavit of
Consolidation dated March 29, 1974 and on May 21, 1975 the Register of Deeds of Laguna
cancelled OCT No. (0-941) 0-198 and issued Transfer Certificate of Title (TCT) No. 41985 in
the name of R & B Insurance. The annotation of usufruct in favor of Justa Kausapin was
maintained in the new title. 6
Despite the earlier conveyance of the subject land in favor of Maxima Hemedes, Justa
Kausapin executed a "Kasunduan" on May 27, 1971 whereby she transferred the same land
to her stepson Enrique D. Hemedes, pursuant to the resolutory condition in the deed of
donation executed in her favor by her late husband Jose Hemedes. Enrique D. Hemedes
obtained two declarations of real property - in 1972, and again, in 1974, when the assessed
value of the property was raised. Also, he has been paying the realty taxes on the property
from the time Justa Kausapin conveyed the property to him in 1971 until 1979. In the
cadastral survey of Cabuyao, Laguna conducted from September 8, 1974 to October 10,
1974, the property was assigned Cadastral No. 2990, Cad. 455-D, Cabuyao Cadastre, in the
name of Enrique Hemedes. Enrique Hemedes is also the named owner of the property in the
records of the Ministry of Agrarian Reform office at Calamba, Laguna.

On February 28, 1979, Enriques D. Hemedes sold the property to Dominium Realty and
Construction Corporation (Dominium). On April 10, 1981, Justa Kausapin executed an
affidavit affirming the conveyance of the subject property in favor of Enrique D. Hemedes as
embodied in the "Kasunduan" dated May 27, 1971, and at the same time denying the
conveyance made to Maxima Hemedes.
On May 14, 1981, Dominium leased the property to its sister corporation Asia Brewery, Inc.
(Asia Brewery) who, even before the signing of the contract of lease, constructed two
warehouses made of steel and asbestos costing about P10,000,000.00 each. Upon learning
of Asia Brewerys constructions upon the subject property, R & B Insurance sent it a letter
on March 16, 1981 informing the former of its ownership of the property as evidenced by
TCT No. 41985 issued in its favor and of its right to appropriate the constructions since Asia
Brewery is a builder in bad faith. On March 27, 1981, a conference was held between R & B
Insurance and Asia Brewery but they failed to arrive at an amicable settlement.
On May 8, 1981, Maxima Hemedes also wrote a letter addressed to Asia Brewery wherein
she asserted that she is the rightful owner of the subject property by virtue of OCT No. (0941) 0-198 and that, as such, she has the right to appropriate Asia Brewerys constructions,
to demand its demolition, or to compel Asia Brewery to purchase the land. In another letter
of the same date addressed to R & B Insurance, Maxima Hemedes denied the execution of
any real estate mortgage in favor of the latter.
On August 27, 1981, Dominium and Enrique D. Hemedes filed a complaint 7 with the Court
of First Instance of Binan, Laguna for the annulment of TCT No. 41985 issued in favor of R &
B Insurance and/or the reconveyance to Dominium of the subject property. Specifically, the
complaint alleged that Dominium was the absolute owner of the subject property by virtue
of the February 28, 1979 deed of sale executed by Enrique D. Hemedes, who in turn
obtained ownership of the land from Justa Kausapin, as evidenced by the "Kasunduan"
dated May 27, 1971. The plaintiffs asserted that Justa Kausapin never transferred the land
to Maxima Hemedes and that Enrique D. Hemedes had no knowledge of the registration
proceedings initiated by Maxima Hemedes.
After considering the merits of the case, the trial court rendered judgment on February 22,
1989 in favor of plaintiffs Dominium and Enrique D. Hemedes, the dispositive portion of
which states
WHEREFORE, judgment is hereby rendered:chanrob1es virtual 1aw library
(a) Declaring Transfer Certificate of Title No. 41985 of the Register of Deeds of Laguna null
and void and ineffective;
(b) Declaring Dominium Realty and Construction Corporation the absolute owner and
possessor of the parcel of land described in paragraph 3 of the complaint;
(c) Ordering the defendants and all persons acting for and/or under them to respect such
ownership and possession of Dominium Realty and Construction Corporation and to forever
desist from asserting adverse claims thereon nor disturbing such ownership and possession;
and
(d) Directing the Register of Deeds of Laguna to cancel said Transfer Certificate of Title No.
41985 in the name of R & B Insurance Corporation, and in lieu thereof, issue a new transfer
certificate of title in the name of Dominium Realty and Construction Corporation. No

pronouncement as to costs and attorneys fees. 8


Both R & B Insurance and Maxima Hemedes appealed from the trial courts decision. On
September 11, 1992 the Court of Appeals affirmed the assailed decision in toto and on
December 29, 1992, it denied R & B Insurances motion for reconsideration. Thus, Maxima
Hemedes and R & B Insurance filed their respective petitions for review with this Court on
November 3, 1992 and February 22, 1993, respectively.
In G.R. No. 107132 9 , petitioner Maxima Hemedes makes the following assignment of
errors as regards public respondents ruling
I
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN APPLYING ARTICLE 1332 OF THE
NEW CIVIL CODE IN DECLARING AS SPURIOUS THE DEED OF CONVEYANCE OF
UNREGISTERED REAL PROPERTY BY REVERSION EXECUTED BY JUSTA KAUSAPIN IN FAVOR
OF PETITIONER MAXIMA HEMEDES.
II
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AS VOID AND OF NO
LEGAL EFFECT THE "KASUNDUAN" DATED 27 MAY 1971 EXECUTED BY JUSTA KAUSAPIN IN
FAVOR OF RESPONDENT ENRIQUE HEMEDES AND THE SALE OF THE SUBJECT PROPERTY BY
RESPONDENT ENRIQUE HEMEDES IN FAVOR OF RESPONDENT DOMINIUM REALTY AND
CONSTRUCTION CORPORATION.
III
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING RESPONDENTS
ENRIQUE AND DOMINIUM IN BAD FAITH.
IV
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT ORIGINAL
CERTIFICATE OF TITLE NO. (0-941) 0-198 ISSUED IN THE NAME OF PETITIONER MAXIMA
HEMEDES NULL AND VOID.
V
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO LOAN WAS OBTAINED
BY PETITIONER MAXIMA HEMEDES FROM RESPONDENT R & B INSURANCE CORPORATION.
VI
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO REAL ESTATE
MORTGAGE OVER THE SUBJECT PROPERTY WAS EXECUTED BY PETITIONER MAXIMA
HEMEDES IN FAVOR OF RESPONDENT R & B INSURANCE CORPORATION.

VII
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT THE VALID TITLE
COVERING THE SUBJECT PROPERTY IS THE ORIGINAL CERTIFICATE OF TITLE NO. (0-941)
0-198 IN THE NAME OF PETITIONER MAXIMA HEMEDES AND NOT THE TRANSFER
CERTIFICATE OF TITLE (TCT) NO. 41985 IN THE NAME OF R & B INSURANCE
CORPORATION. 10
Meanwhile, in G.R. No. 108472 11 , petitioner R & B Insurance assigns almost the same
errors, except with regards to the real estate mortgage allegedly executed by Maxima
Hemedes in its favor. Specifically, R & B Insurance alleges that:chanrob1es virtual 1aw
library
I
RESPONDENT COURT ERRONEOUSLY ERRED IN APPLYING ARTICLE 1332 OF THE CIVIL
CODE.
II
RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic) THE KASUNDUAN
BY AND BETWEEN JUSTA KAUSAPIN AND ENRIQUE NOTWITHSTANDING THE FACT THAT
JUSTA KAUSAPIN BY WAY OF A DEED OF CONVEYANCE OF UNREGISTERED REAL PROPERTY
BY REVERSION CEDED THE SUBJECT PROPERTY TO MAXIMA SOME ELEVEN (11) YEARS
EARLIER.
III
RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic) THE AFFIDAVIT OF
REPUDIATION OF JUSTA KAUSAPIN NOTWITHSTANDING THE FACT THAT SHE IS A BIAS
(sic) WITNESS AND EXECUTED THE SAME SOME TWENTY-ONE (21) YEARS AFTER THE
EXECUTION OF THE DEED OF CONVEYANCE IN FAVOR OF MAXIMA.
IV
RESPONDENT COURT SERIOUSLY ERRED IN NOT FINDING THAT THE COMPLAINT OF
ENRIQUE AND DOMINIUM HAS PRESCRIBED AND/OR THAT ENRIQUE AND DOMINIUM WERE
GUILTY OF LACHES.
V
RESPONDENT COURT SERIOUSLY ERRED IN FINDING R & B AS A MORTGAGEE NOT IN
GOOD FAITH.
VI

RESPONDENT COURT SERIOUSLY ERRED IN NOT GRANTING THE DAMAGES PRAYED FOR BY
R & B IN ITS COUNTERCLAIM AND CROSSCLAIM. 12
The primary issue to be resolved in these consolidated petitions is which of the two
conveyances by Justa Kausapin, the first in favor of Maxima Hemedes and the second in
favor of Enrique D. Hemedes, effectively transferred ownership over the subject land.
The Register of Deeds of Laguna issued OCT No. (0-941) 0-198 in favor of Maxima Hemedes
on the strength of the "Deed of Conveyance of Unregistered Real Property by Reversion"
executed by Justa Kausapin. Public respondent upheld the trial courts finding that such
deed is sham and spurious and has "no evidentiary value under the law upon which claimant
Maxima Hemedes may anchor a valid claim of ownership over the property." In ruling thus,
it gave credence to the April 10, 1981 affidavit executed by Justa Kausapin repudiating such
deed of conveyance in favor of Maxima Hemedes and affirming the authenticity of the
"Kasunduan" in favor of Enrique D. Hemedes. Also, it considered as pivotal the fact that the
deed of conveyance in favor of Maxima Hemedes was in English and that it was not
explained to Justa Kausapin, although she could not read nor understand English; thus,
Maxima Hemedes failed to discharge her burden, pursuant to Article 1332 of the Civil Code,
to show that the terms thereof were fully explained to Justa Kausapin. Public respondent
concluded by holding that the registration of the property on the strength of the spurious
deed of conveyance is null and void and does not confer any right of ownership upon
Maxima Hemedes. 13
Maxima Hemedes argues that Justa Kausapins affidavit should not be given any credence
since she is obviously a biased witness as it has been shown that she is dependent upon
Enrique D. Hemedes for her daily subsistence, and she was most probably influenced by
Enrique D. Hemedes to execute the "Kasunduan" in his favor. She also refutes the
applicability of article 1332. It is her contention that for such a provision to be applicable,
there must be a party seeking to enforce a contract; however, she is not enforcing the
"Deed of Conveyance of Unregistered Real Property by Reversion" as her basis in claiming
ownership, but rather her claim is anchored upon OCT No. (0-941) 0-198 issued in her
name, which document can stand independently from the deed of conveyance. Also, there
exist various circumstances which show that Justa Kausapin did in fact execute and
understand the deed of conveyance in favor of Maxima Hemedes. First, the "Donation
Intervivos With Resolutory Conditions" executed by Jose Hemedes in favor of Justa Kausapin
was also in English, but she never alleged that she did not understand such document.
Secondly, Justa Kausapin failed to prove that it was not her thumbmark on the deed of
conveyance in favor of Maxima Hemedes and in fact, both Enrique D. Hemedes and
Dominium objected to the request of Maxima Hemedes counsel to obtain a specimen
thumbmark of Justa Kausapin. 14
Public respondents finding that the "Deed of Conveyance of Unregistered Real Property By
Reversion" executed by Justa Kausapin in favor of Maxima Hemedes is spurious is not
supported by the factual findings in this case.. It is grounded upon the mere denial of the
same by Justa Kausapin. A party to a contract cannot just evade compliance with his
contractual obligations by the simple expedient of denying the execution of such contract. If,
after a perfect and binding contract has been executed between the parties, it occurs to one
of them to allege some defect therein as a reason for annulling it, the alleged defect must
be conclusively proven, since the validity and fulfillment of contracts cannot be left to the
will of one of the contracting parties. 15
Although a comparison of Justa Kausapins thumbmark with the thumbmark affixed upon
the deed of conveyance would have easily cleared any doubts as to whether or not the deed

was forged, the records do not show that such evidence was introduced by private
respondents and the lower court decisions do not make mention of any comparison having
been made. 16 It is a legal presumption that evidence willfully suppressed would be adverse
if produced. 17 The failure of private respondents to refute the due execution of the deed of
conveyance by making a comparison with Justa Kausapins thumbmark necessarily leads
one to conclude that she did in fact affix her thumbmark upon the deed of donation in favor
of her stepdaughter.
Moreover, public respondents reliance upon Justa Kausapins repudiation of the deed of
conveyance is misplaced for there are strong indications that she is a biased witness. The
trial court found that Justa Kausapin was dependent upon Enrique D. Hemedes for financial
assistance. 18 Justa Kausapins own testimony attests to this fact
Atty. Conchu:chanrob1es virtual 1aw library
Q: Aling Justa, can you tell the Honorable Court why you donated this particular property to
Enrique Hemedes?
A: Because I was in serious condition and he was the one supporting me financially.
Q: As of today, Aling Justa are you continuing to receive any assistance from Enrique
Hemedes?
A: Yes Sir.
(TSN pp. 19 and 23, November 17, 1981) 19
Even Enrique Hemedes admitted that Justa Kausapin was dependent upon him for financial
support. The transcripts state as follows:chanrob1es virtual 1aw library
Atty. Mora:chanrob1es virtual 1aw library
Now you said that Justa Kausapin has been receiving from you advances for food, medicine
& other personal or family needs?
E. Hemedes:chanrob1es virtual 1aw library
A: Yes.
Q: Was this already the practice at the time this "Kasunduan" was executed?
A: No that was increased, no, no, after this document.
x

Q: And because of these accommodations that you have given to Justa Kausapin; Justa
Kausapin has in turn treated you very well because shes very grateful for that, is it not?
A: I think thats human nature.
Q: Answer me categorically, Mr. Hemedes shes very grateful?

A: Yes she might be grateful but not very grateful.


(TSN, p. 34, June 15, 1984) 20
A witness is said to be biased when his relation to the cause or to the parties is such that he
has an incentive to exaggerate or give false color to his statements, or to suppress or to
pervert the truth, or to state what is false. 21 At the time the present case was filed in the
trial court in 1981, Justa Kausapin was already 80 years old, suffering from worsening
physical infirmities and completely dependent upon her stepson Enrique D. Hemedes for
support. It is apparent that Enrique D. Hemedes could easily have influenced his aging
stepmother to donate the subject property to him. Public respondent should not have given
credence to a witness that was obviously biased and partial to the cause of private
respondents. Although it is a well-established rule that the matter of credibility lies within
the province of the trial court, such rule does not apply when the witness credibility has
been put in serious doubt, such as when there appears on the record some fact or
circumstance of weight and influence, which has been overlooked or the significance of
which has been misinterpreted. 22
Finally, public respondent was in error when it sustained the trial courts decision to nullify
the "Deed of Conveyance of Unregistered Real Property by Reversion" for failure of Maxima
Hemedes to comply with article 1332 of the Civil Code, which states:chanrob1es virtual 1aw
library
When one of the parties is unable to read, or if the contract is in a language not understood
by him, and mistake or fraud is alleged, the person enforcing the contract must show that
the terms thereof have been fully explained to the former.
Article 1332 was intended for the protection of a party to a contract who is at a
disadvantage due to his illiteracy, ignorance, mental weakness or other handicap. 23 This
article contemplates a situation wherein a contract has been entered into, but the consent of
one of the parties is vitiated by mistake or fraud committed by the other contracting party.
24 This is apparent from the ordering of the provisions under Book IV, Title II, Chapter 2,
section 1 of the Civil Code, from which article 1332 is taken. Article 1330 states that
A contract where consent is given through mistake, violence, intimidation, undue influence,
or fraud is voidable.
This is immediately followed by provisions explaining what constitutes mistake, violence,
intimidation, undue influence, or fraud sufficient to vitiate consent. 25 In order that mistake
may invalidate consent, it should refer to the substance of the thing which is the object of
the contract, or to those conditions which have principally moved one or both parties to
enter into the contract. 26 Fraud, on the other hand, is present when, through insidious
words or machinations of one of the contracting parties, the other is induced to enter into a
contract which, without them, he would not have agreed to. 27 Clearly, article 1332
assumes that the consent of the contracting party imputing the mistake or fraud was given,
although vitiated, and does not cover a situation where there is a complete absence of
consent.
In this case, Justa Kausapin disclaims any knowledge of the "Deed of Conveyance of
Unregistered Real Property by Reversion" in favor of Maxima Hemedes. In fact, she asserts
that it was only during the hearing conducted on December 7, 1981 before the trial court
that she first caught a glimpse of the deed of conveyance and thus, she could not have
possibly affixed her thumbmark thereto. 28 It is private respondents own allegations which

render article 1332 inapplicable for it is useless to determine whether or not Justa Kausapin
was induced to execute said deed of conveyance by means of fraud employed by Maxima
Hemedes, who allegedly took advantage of the fact that the former could not understand
English, when Justa Kausapin denies even having seen the document before the present
case was initiated in 1981.
It has been held by this Court that." . . mere preponderance of evidence is not sufficient to
overthrow a certificate of a notary public to the effect that the grantor executed a certain
document and acknowledged the fact of its execution before him. To accomplish this result,
the evidence must be so clear, strong and convincing as to exclude all reasonable
controversy as to the falsity of the certificate, and when the evidence is conflicting, the
certificate will be upheld." 29 In the present case, we hold that private respondents have
failed to produce clear, strong, and convincing evidence to overcome the positive value of
the "Deed of Conveyance of Unregistered Real Property by Reversion" a notarized
document. The mere denial of its execution by the donor will not suffice for the purpose.
In upholding the deed of conveyance in favor of Maxima Hemedes, we must concomitantly
rule that Enrique D. Hemedes and his transferee, Dominium, did not acquire any rights over
the subject property. Justa Kausapin sought to transfer to her stepson exactly what she had
earlier transferred to Maxima Hemedes the ownership of the subject property pursuant to
the first condition stipulated in the deed of donation executed by her husband. Thus, the
donation in favor of Enrique D. Hemedes is null and void for the purported object thereof did
not exist at the time of the transfer, having already been transferred to his sister. 30
Similarly, the sale of the subject property by Enrique D. Hemedes to Dominium is also a
nullity for the latter cannot acquire more rights than its predecessor-in-interest and is
definitely not an innocent purchaser for value since Enrique D. Hemedes did not present any
certificate of title upon which it relied.chanroblesvirtuallawlibrary
The declarations of real property by Enrique D. Hemedes, his payment of realty taxes, and
his being designated as owner of the subject property in the cadastral survey of Cabuyao,
Laguna and in the records of the Ministry of Agrarian Reform office in Calamba, Laguna
cannot defeat a certificate of title, which is an absolute and indefeasible evidence of
ownership of the property in favor of the person whose name appears therein. 31
Particularly, with regard to tax declarations and tax receipts, this Court has held on several
occasions that the same do not by themselves conclusively prove title to land. 32
We come now to the question of whether or not R & B Insurance should be considered an
innocent purchaser of the land in question. At the outset, we note that both the trial court
and appellate court found that Maxima Hemedes did in fact execute a mortgage over the
subject property in favor of R & B Insurance. This finding shall not be disturbed because, as
we stated earlier, it is a rule that the factual findings of the trial court, especially when
affirmed by the Court of Appeals, are entitled to respect, and should not be disturbed on
appeal. 33
In holding that R & B Insurance is not a mortgagee in good faith, public respondent stated
that the fact that the certificate of title of the subject property indicates upon its face that
the same is subject to an encumbrance, i.e. usufructuary rights in favor of Justa Kausapin
during her lifetime or widowhood, should have prompted R & B Insurance to" investigate
further the circumstances behind this encumbrance on the land in dispute," but which it
failed to do. Also, public respondent considered against R & B Insurance the fact that it
made it appear in the mortgage contract that the land was free from all liens, charges,
taxes and encumbrances. 34chanrobles virtual lawlibrary

R & B Insurance alleges that, contrary to public respondents ruling, the presence of an
encumbrance on the certificate of title is not reason for the purchaser or a prospective
mortgagee to look beyond the face of the certificate of title. The owner of a parcel of land
may still sell the same even though such land is subject to a usufruct; the buyers title over
the property will simply be restricted by the rights of the usufructuary. Thus, R & B
Insurance accepted the mortgage subject to the usufructuary rights of Justa Kausapin.
Furthermore, even assuming that R & B Insurance was legally obliged to go beyond the title
and search for any hidden defect or inchoate right which could defeat its right thereto, it
would not have discovered anything since the mortgage was entered into in 1964, while the
"Kasunduan" conveying the land to Enrique D. Hemedes was only entered into in 1971 and
the affidavit repudiating the deed of conveyance in favor of Maxima Hemedes was executed
by Justa Kausapin in 1981. 35
We sustain petitioner R & B Insurances claim that it is entitled to the protection of a
mortgagee in good faith.
It is a well-established principle that every person dealing with registered land may safely
rely on the correctness of the certificate of title issued and the law will in no way oblige him
to go behind the certificate to determine the condition of the property. 36 An innocent
purchaser for value 37 is one who buys the property of another without notice that some
other person has a right to or interest in such property and pays a full and fair price for the
same at the time of such purchase or before he has notice of the claim of another person.
38
The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima Hemedes
OCT dose not impose upon R & B Insurance the obligation to investigate the validity of its
mortgagors title. Usufruct gives a right to enjoy the property of another with the obligation
of preserving its form and substance. 39 The usufructuary is entitled to all the natural,
industrial and civil fruits of the property 40 and may personally enjoy the thing in usufruct,
lease it to another, or alienate his right of usufruct, even by a gratuitous title, but all the
contracts he may enter into as such usufructuary shall terminate upon the expiration of the
usufruct. 41
Clearly, only the jus utendi and jus fruendi over the property is transferred to the
usufructuary. 42 The owner of the property maintains the jus disponendi or the power to
alienate, encumber, transform, and even destroy the same. 43 This right is embodied in the
Civil Code, which provides that the owner of property the usufruct of which is held by
another, may alienate it, although he cannot alter the propertys form or substance, or do
anything which may be prejudicial to the usufructuary. 44
There is no doubt that the owner may validly mortgage the property in favor of a third
person and the law provides that, in such a case, the usufructuary shall not be obliged to
pay the debt of the mortgagor, and should the immovable be attached or sold judicially for
the payment of the debt, the owner shall be liable to the usufructuary for whatever the
latter may lose by reason thereof. 45
Based on the foregoing, the annotation of usufructuary rights in favor of Justa Kausapin is
not sufficient cause to require R & B Insurance to investigate Maxima Hemedes title,
contrary to public respondents ruling, for the reason that Maxima Hemedes ownership over
the property remained unimpaired despite such encumbrance. R & B Insurance had a right
to rely on the certificate of title and was not in bad faith in accepting the property as a
security for the loan it extended to Maxima Hemedes.

Even assuming in gratia argumenti that R & B Insurance was obligated to look beyond the
certificate of title and investigate the title of its mortgagor, still, it would not have discovered
any better rights in favor of private respondents. Enrique D. Hemedes and Dominium base
their claims to the property upon the "Kasunduan" allegedly executed by Justa Kausapin in
favor of Enrique Hemedes. As we have already stated earlier, such contract is a nullity as its
subject matter was in existent. Also, the land was mortgaged to R & B Insurance as early as
1964, while the "Kasunduan" was executed only in 1971 and the affidavit of Justa Kausapin
affirming the conveyance in favor of Enrique D. Hemedes was executed in 1981. Thus, even
if R & B Insurance investigated the title of Maxima Hemedes, it would not have discovered
any adverse claim to the land in derogation of its mortgagors title. We reiterate that at no
point in time could private respondents establish any rights or maintain any claim over the
land.
It is a well-settled principle that where innocent third persons rely upon the correctness of a
certificate of title and acquire rights over the property, the court cannot just disregard such
rights. Otherwise, public confidence in the certificate of title, and ultimately, the Torrens
system, would be impaired for everyone dealing with registered property would still have to
inquire at every instance whether the title has been regularly or irregularly issued. 46 Being
an innocent mortgagee for value, R & B Insurance validly acquired ownership over the
property, subject only to the usufructuary rights of Justa Kausapin thereto, as this
encumbrance was properly annotated upon its certificate of title.
The factual findings of the trial court, particularly when affirmed by the appellate court,
carry great weight and are entitled to respect on appeal, except under certain
circumstances. 47 One such circumstance that would compel the Court to review the factual
findings of the lower courts is where the lower courts manifestly overlooked certain relevant
facts not disputed by the parties and which, if properly considered, would justify a different
conclusion. 48 Also, it is axiomatic that the drawing of the proper legal conclusions from
such factual findings are within the peculiar province of this Court. 49
As regards R & B Insurances prayer that Dominium be ordered to demolish the warehouses
or that it be declared the owner thereof since the same were built in bad faith, we note that
such warehouses were constructed by Asia Brewery, not by Dominium. However, despite its
being a necessary party in the present case, the lower courts never acquired jurisdiction
over Asia Brewery, whether as a plaintiff or defendant, and their respective decisions did not
pass upon the constructions made upon the subject property. Courts acquire jurisdiction
over a party plaintiff upon the filing of the complaint, while jurisdiction over the person of a
party defendant is acquired upon the service of summons in the manner required by law or
by his voluntary appearance. As a rule, if a defendant has not been summoned, the court
acquires no jurisdiction over his person, and any personal judgment rendered against such
defendant is null and void. 50 In the present case, since Asia Brewery is a necessary party
that was not joined in the action, any judgment rendered in this case shall be without
prejudice to its rights. 51
As to its claim for moral damages, we hold that R & B Insurance is not entitled to the same
for it has not alleged nor proven the factual basis for the same. Neither is it entitled to
exemplary damages, which may only be awarded if the claimant is entitled to moral,
temperate, liquidated or compensatory damages. 52 R & B Insurances claim for attorneys
fees must also fail. The award of attorneys fees is the exception rather than the rule and
counsels fees are not to be awarded every time a party wins a suit. Its award pursuant to
article 2208 of the Civil Code demands factual, legal and equitable justification and cannot
be left to speculation and conjecture. 53 Under the circumstances prevailing in the instant
case, there is no factual or legal basis for an award of attorneys fees.

WHEREFORE, the assailed decision of public respondent and its resolution dated February
22, 1989 are REVERSED. We uphold petitioner R & B Insurances assertion of ownership
over the property in dispute, as evidenced by TCT No. 41985, subject to the usufructuary
rights of Justa Kausapin, which encumbrance has been properly annotated upon the said
certificate of title. No pronouncement as to costs.
SO ORDERED.
106. Siguan v. Lim (318 SCRA 725)185 186
G.R. No. 134685. November 19, 1999]
MARIA ANTONIA SIGUAN, Petitioner, v. ROSA LIM, LINDE LIM, INGRID LIM and
NEIL LIM, Respondents.
DECISION
DAVIDE, JR., C.J.:
May the Deed of Donation executed by respondent Rosa Lim (hereafter LIM) in favor of her
children be rescinded for being in fraud of her alleged creditor, petitioner Maria Antonia
Siguan? This is the pivotal issue to be resolved in this petition for review on certiorariunder
Rule 45 of the Revised Rules of Court.
The relevant facts, as borne out of the records, are as follows:
On 25 and 26 August 1990, LIM issued two Metrobank checks in the sums of P300,000
and P241,668, respectively, payable to cash. Upon presentment by petitioner with the
drawee bank, the checks were dishonored for the reason account closed. Demands to make
good the checks proved futile. As a consequence, a criminal case for violation of Batas
Pambansa Blg. 22, docketed as Criminal Cases Nos. 22127-28, were filed by petitioner
against LIM with Branch 23 of the Regional Trial Court (RTC) of Cebu City. In its
decision1dated 29 December 1992, the court a quo convicted LIM as charged. The case is
pending before this Court for review and docketed as G.R. No. 134685.
It also appears that on 31 July 1990 LIM was convicted of estafa by the RTC of Quezon City
in Criminal Case No. Q-89-22162 filed by a certain Victoria Suarez. This decision was
affirmed by the Court of Appeals. On appeal, however, this Court, in a decision3promulgated
on 7 April 1997, acquitted LIM but held her civilly liable in the amount of P169,000, as
actual damages, plus legal interest.
Meanwhile, on 2 July 1991, a Deed of Donation4 conveying the following parcels of land and
purportedly executed by LIM on 10 August 1989 in favor of her children, Linde, Ingrid and
Neil, was registered with the Office of the Register of Deeds of Cebu City:
(1) a parcel of land situated at Barrio Lahug, Cebu City, containing an area of 563 sq. m.
and covered by TCT No. 93433;
(2) a parcel of land situated at Barrio Lahug, Cebu City, containing an area of 600 sq. m.
and covered by TCT No. 93434;

(3) a parcel of land situated at Cebu City containing an area of 368 sq. m. and covered by
TCT No. 87019; and
(4) a parcel of land situated at Cebu City, Cebu containing an area of 511 sq. m. and
covered by TCT No. 87020.
New transfer certificates of title were thereafter issued in the names of the donees.5
On 23 June 1993, petitioner filed an accion pauliana against LIM and her children before
Branch 18 of the RTC of Cebu City to rescind the questioned Deed of Donation and to
declare as null and void the new transfer certificates of title issued for the lots covered by
the questioned Deed. The complaint was docketed as Civil Case No. CEB-14181. Petitioner
claimed therein that sometime in July 1991, LIM, through a Deed of Donation, fraudulently
transferred all her real property to her children in bad faith and in fraud of creditors,
including her; that LIM conspired and confederated with her children in antedating the
questioned Deed of Donation, to petitioners and other creditors prejudice; and that LIM, at
the time of the fraudulent conveyance, left no sufficient properties to pay her obligations.
On the other hand, LIM denied any liability to petitioner. She claimed that her convictions in
Criminal Cases Nos. 22127-28 were erroneous, which was the reason why she appealed said
decision to the Court of Appeals. As regards the questioned Deed of Donation, she
maintained that it was not antedated but was made in good faith at a time when she had
sufficient property. Finally, she alleged that the Deed of Donation was registered only on 2
July 1991 because she was seriously ill.
In its decision of 31 December 1994,6 the trial court ordered the rescission of the
questioned deed of donation; (2) declared null and void the transfer certificates of title
issued in the names of private respondents Linde, Ingrid and Neil Lim; (3) ordered the
Register of Deeds of Cebu City to cancel said titles and to reinstate the previous titles in the
name of Rosa Lim; and (4) directed the LIMs to pay the petitioner, jointly and severally, the
sum of P10,000 as moral damages; P10,000 as attorneys fees; and P5,000 as expenses of
litigation.
On appeal, the Court of Appeals, in a decision7 promulgated on 20 February 1998, reversed
the decision of the trial court and dismissed petitioners accion pauliana. It held that two of
the requisites for filing an accion pauliana were absent, namely, (1) there must be a credit
existing prior to the celebration of the contract; and (2) there must be a fraud, or at least
the intent to commit fraud, to the prejudice of the creditor seeking the rescission.
According to the Court of Appeals, the Deed of Donation, which was executed and
acknowledged before a notary public, appears on its face to have been executed on 10
August 1989. Under Section 23 of Rule 132 of the Rules of Court, the questioned Deed,
being a public document, is evidence of the fact which gave rise to its execution and of the
date thereof. No antedating of the Deed of Donation was made, there being no convincing
evidence on record to indicate that the notary public and the parties did antedate it. Since
LIMs indebtedness to petitioner was incurred in August 1990, or a year after the execution
of the Deed of Donation, the first requirement for accion pauliana was not met.
Anent petitioners contention that assuming that the Deed of Donation was not antedated it
was nevertheless in fraud of creditors because Victoria Suarez became LIMs creditor on 8
October 1987, the Court of Appeals found the same untenable, for the rule is basic that the
fraud must prejudice the creditor seeking the rescission.

Her motion for reconsideration having been denied, petitioner came to this Court and
submits the following issue:
WHETHER OR NOT THE DEED OF DONATION, EXH. 1, WAS ENTERED INTO IN FRAUD OF
[THE] CREDITORS OF RESPONDENT ROSA [LIM].
Petitioner argues that the finding of the Court of Appeals that the Deed of Donation was not
in fraud of creditors is contrary to well-settled jurisprudence laid down by this Court as early
as 1912 in the case of Oria v. McMicking,8 which enumerated the various circumstances
indicating the existence of fraud in a transaction. She reiterates her arguments below, and
adds that another fact found by the trial court and admitted by the parties but untouched by
the Court of Appeals is the existence of a prior final judgment against LIM in Criminal Case
No. Q-89-2216 declaring Victoria Suarez as LIMs judgment creditor before the execution of
the Deed of Donation.
Petitioner further argues that the Court of Appeals incorrectly applied or interpreted Section
23,9 Rule 132 of the Rules of Court, in holding that being a public document, the said deed
of donation is evidence of the fact which gave rise to its execution and of the date of the
latter. Said provision should be read with Section 3010 of the same Rule which provides that
notarial documents are prima facie evidence of their execution, not of the facts which gave
rise to their execution and of the date of the latter.
Finally, petitioner avers that the Court of Appeals overlooked Article 759 of the New Civil
Code, which provides: The donation is always presumed to be in fraud of creditors when at
the time of the execution thereof the donor did not reserve sufficient property to pay his
debts prior to the donation. In this case, LIM made no reservation of sufficient property to
pay her creditors prior to the execution of the Deed of Donation.
On the other hand, respondents argue that (a) having agreed on the law and requisites
of accion pauliana, petitioner cannot take shelter under a different law; (b) petitioner cannot
invoke the credit of Victoria Suarez, who is not a party to this case, to support her accion
pauliana; (c) the Court of Appeals correctly applied or interpreted Section 23 of Rule 132 of
the Rules of Court; (d) petitioner failed to present convincing evidence that the Deed of
Donation was antedated and executed in fraud of petitioner; and (e) the Court of Appeals
correctly struck down the awards of damages, attorneys fees and expenses of litigation
because there is no factual basis therefor in the body of the trial courts decision.
The primordial issue for resolution is whether the questioned Deed of Donation was made in
fraud of petitioner and, therefore, rescissible. A corollary issue is whether the awards of
damages, attorneys fees and expenses of litigation are proper.
We resolve these issues in the negative.
The rule is well settled that the jurisdiction of this Court in cases brought before it from the
Court of Appeals via Rule 45 of the Rules of Court is limited to reviewing errors of law.
Findings of fact of the latter court are conclusive, except in a number of instances. 11 In the
case at bar, one of the recognized exceptions warranting a review by this Court of the
factual findings of the Court of Appeals exists, to wit, the factual findings and conclusions of
the lower court and Court of Appeals are conflicting, especially on the issue of whether the
Deed of Donation in question was in fraud of creditors.

Article 1381 of the Civil Code enumerates the contracts which are rescissible, and among
them are those contracts undertaken in fraud of creditors when the latter cannot in any
other manner collect the claims due them.
The action to rescind contracts in fraud of creditors is known as accion pauliana. For this
action to prosper, the following requisites must be present: (1) the plaintiff asking for
rescission has a credit prior to the alienation,12 although demandable later; (2) the debtor
has made a subsequent contract conveying a patrimonial benefit to a third person; (3) the
creditor has no other legal remedy to satisfy his claim; 13 (4) the act being impugned is
fraudulent;14 (5) the third person who received the property conveyed, if it is by onerous
title, has been an accomplice in the fraud.15
The general rule is that rescission requires the existence of creditors at the time of the
alleged fraudulent alienation, and this must be proved as one of the bases of the judicial
pronouncement setting aside the contract.16 Without any prior existing debt, there can
neither be injury nor fraud. While it is necessary that the credit of the plaintiff in the accion
pauliana must exist prior to the fraudulent alienation, the date of the judgment enforcing it
is immaterial. Even if the judgment be subsequent to the alienation, it is merely declaratory,
with retroactive effect to the date when the credit was constituted. 17
In the instant case, the alleged debt of LIM in favor of petitioner was incurred in August
1990, while the deed of donation was purportedly executed on 10 August 1989.
We are not convinced with the allegation of the petitioner that the questioned deed was
antedated to make it appear that it was made prior to petitioners credit. Notably, that deed
is a public document, it having been acknowledged before a notary public.18 As such, it is
evidence of the fact which gave rise to its execution and of its date, pursuant to Section 23,
Rule 132 of the Rules of Court.
Petitioners contention that the public documents referred to in said Section 23 are only
those entries in public records made in the performance of a duty by a public officer does
not hold water. Section 23 reads:
SEC. 23. Public documents as evidence. Documents consisting of entries in public records
made in the performance of a duty by a public officer are prima facie evidence of the facts
therein stated. All other public documents are evidence, even against a third person, of the
fact which gave rise to their execution and of the date of the latter. (Emphasis supplied).
The phrase all other public documents in the second sentence of Section 23 means those
public documents other than the entries in public records made in the performance of a duty
by a public officer. And these include notarial documents, like the subject deed of donation.
Section 19, Rule 132 of the Rules of Court provides:
SEC. 19. Classes of documents. -- For the purpose of their presentation in evidence,
documents are either public or private.
Public documents are:
(a) . . .
(b) Documents acknowledged before a notary public except last wills and testaments. . . .

It bears repeating that notarial documents, except last wills and testaments, are public
documents and are evidence of the facts that gave rise to their execution and of their date.
In the present case, the fact that the questioned Deed was registered only on 2 July 1991 is
not enough to overcome the presumption as to the truthfulness of the statement of the date
in the questioned deed, which is 10 August 1989. Petitioners claim against LIM was
constituted only in August 1990, or a year after the questioned alienation. Thus, the first
two requisites for the rescission of contracts are absent.
Even assuming arguendo that petitioner became a creditor of LIM prior to the celebration of
the contract of donation, still her action for rescission would not fare well because the third
requisite was not met. Under Article 1381 of the Civil Code, contracts entered into in fraud
of creditors may be rescinded only when the creditors cannot in any manner collect the
claims due them. Also, Article 1383 of the same Code provides that the action for rescission
is but a subsidiary remedy which cannot be instituted except when the party suffering
damage has no other legal means to obtain reparation for the same. The term subsidiary
remedy has been defined as the exhaustion of all remedies by the prejudiced creditor to
collect claims due him before rescission is resorted to.19 It is, therefore, essential that the
party asking for rescission prove that he has exhausted all other legal means to obtain
satisfaction of his claim.20 Petitioner neither alleged nor proved that she did so. On this
score, her action for the rescission of the questioned deed is not maintainable even if the
fraud charged actually did exist.21
The fourth requisite for an accion pauliana to prosper is not present either.
Article 1387, first paragraph, of the Civil Code provides: All contracts by virtue of which the
debtor alienates property by gratuitous title are presumed to have been entered into in
fraud of creditors when the donor did not reserve sufficient property to pay all debts
contracted before the donation. Likewise, Article 759 of the same Code, second paragraph,
states that the donation is always presumed to be in fraud of creditors when at the time
thereof the donor did not reserve sufficient property to pay his debts prior to the donation.
For this presumption of fraud to apply, it must be established that the donor did not leave
adequate properties which creditors might have recourse for the collection of their credits
existing before the execution of the donation.
As earlier discussed, petitioners alleged credit existed only a year after the deed of donation
was executed. She cannot, therefore, be said to have been prejudiced or defrauded by such
alienation. Besides, the evidence disclose that as of 10 August 1989, when the deed of
donation was executed, LIM had the following properties:
(1) A parcel of land containing an area of 220 square meters, together with the house
constructed thereon, situated in Sto. Nio Village, Mandaue City, Cebu, registered in the
name of Rosa Lim and covered by TCT No. 19706;22
(2) A parcel of land located in Benros Subdivision, Lawa-an, Talisay, Cebu;23
(3) A parcel of land containing an area of 2.152 hectares, with coconut trees thereon,
situated at Hindag-an, St. Bernard, Southern Leyte, and covered by Tax Declaration No.
13572.24

(4) A parcel of land containing an area of 3.6 hectares, with coconut trees thereon, situated
at Hindag-an, St. Bernard, Southern Leyte, and covered by Tax Declaration No. 13571.25
During her cross-examination, LIM declared that the house and lot mentioned in no. 1 was
bought by her in the amount of about P800,000 to P900,000.26 Thus:
ATTY. FLORIDO:
Q These properties at the Sto. Nio Village, how much did you acquire this property?
A Including the residential house P800,000.00 to P900,000.00.
Q How about the lot which includes the house. How much was the price in the Deed of Sale
of the house and lot at Sto. Nio Violage [sic]?
A I forgot.
Q How much did you pay for it?
A That is P800,000.00 to P900,000.00.
Petitioner did not adduce any evidence that the price of said property was lower. Anent the
property in no. 2, LIM testified that she sold it in 1990.27 As to the properties in nos. 3 and
4, the total market value stated in the tax declarations dated 23 November 1993
was P56,871.60. Aside from these tax declarations, petitioner did not present evidence that
would indicate the actual market value of said properties. It was not, therefore, sufficiently
established that the properties left behind by LIM were not sufficient to cover her debts
existing before the donation was made. Hence, the presumption of fraud will not come into
play.
Nevertheless, a creditor need not depend solely upon the presumption laid down in Articles
759 and 1387 of the Civil Code. Under the third paragraph of Article 1387, the design to
defraud may be proved in any other manner recognized by the law of evidence. Thus in the
consideration of whether certain transfers are fraudulent, the Court has laid down specific
rules by which the character of the transaction may be determined. The following have been
denominated by the Court as badges of fraud:
(1) The fact that the consideration of the conveyance is fictitious or is inadequate;
(2) A transfer made by a debtor after suit has begun and while it is pending against him;
(3) A sale upon credit by an insolvent debtor;
(4) Evidence of large indebtedness or complete insolvency;
(5) The transfer of all or nearly all of his property by a debtor, especially when he is
insolvent or greatly embarrassed financially;
(6) The fact that the transfer is made between father and son, when there are present other
of the above circumstances; and

(7) The failure of the vendee to take exclusive possession of all the property.28
The above enumeration, however, is not an exclusive list. The circumstances evidencing
fraud are as varied as the men who perpetrate the fraud in each case. This Court has
therefore declined to define it, reserving the liberty to deal with it under whatever form it
may present itself.29
Petitioner failed to discharge the burden of proving any of the circumstances enumerated
above or any other circumstance from which fraud can be inferred. Accordingly, since the
four requirements for the rescission of a gratuitous contract are not present in this case,
petitioners action must fail.
In her further attempt to support her action for rescission, petitioner brings to our attention
the 31 July 1990 Decision30 of the RTC of Quezon City, Branch 92, in Criminal Case No. Q89-2216. LIM was therein held guilty of estafa and was ordered to pay complainant Victoria
Suarez the sum of P169,000 for the obligation LIM incurred on 8 October 1987. This
decision was affirmed by the Court of Appeals. Upon appeal, however, this Court acquitted
LIM of estafa but held her civilly liable for P169,000 as actual damages.
It should be noted that the complainant in that case, Victoria Suarez, albeit a creditor prior
to the questioned alienation, is not a party to this accion pauliana. Article 1384 of the Civil
Code provides that rescission shall only be to the extent necessary to cover the damages
caused. Under this Article, only the creditor who brought the action for rescission can
benefit from the rescission; those who are strangers to the action cannot benefit from its
effects.31 And the revocation is only to the extent of the plaintiff creditors unsatisfied credit;
as to the excess, the alienation is maintained.32 Thus, petitioner cannot invoke the credit of
Suarez to justify rescission of the subject deed of donation.
Now on the propriety of the trial courts awards of moral damages, attorneys fees and
expenses of litigation in favor of the petitioner. We have pored over the records and found
no factual or legal basis therefor. The trial court made these awards in the dispositive
portion of its decision without stating, however, any justification for the same in the ratio
decidendi. Hence, the Court of Appeals correctly deleted these awards for want of basis in
fact, law or equity.
WHEREFORE, the petition is hereby DISMISSED and the challenged decision of the Court of
Appeals in CA-G.R. CV. No. 50091 is AFFIRMED in toto.
No pronouncement as to costs.
SO ORDERED.
107. Noceda v. Court of Appeals (313 SCRA 504)187 188
G.R. No. 119730. September 2, 1999.]
RODOLFO NOCEDA, Petitioner, v. COURT OF APPEALS and AURORA ARBIZO
DIRECTO, Respondents.
DECISION

GONZAGA-REYES, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court seeks to reverse
the decision dated March 31, 1995 of the respondent Court of Appeals 1 in CA GR CV No.
38126, affirming with modification the decision of the Regional Trial Court, Branch 71, of
Iba, Zambales, 2 in an action by private respondent against petitioner for recovery of
possession and ownership and rescission/annulment of donation.chanrobles law library : red
The facts of the case as summarized by the respondent Court are as follows: 3
"On June 1, 1981, plaintiff Aurora Directo, defendant Rodolfo Noceda, and Maria Arbizo, the
daughter, grandson, and widow, respectively, of the late Celestino Arbizo, who died in 1956,
extrajudicially settled a parcel of land, Lot 1121, located at Bitaog, San Isidro, Cabangan,
Zambales, which was said to have an area of 66,530 square meters. Plaintiff Directos share
was 11,426 square meters, defendant Noceda got 13,294 square meters, and the remaining
41,810 square meters went to Maria Arbizo (Exhibit G). On the same date, plaintiff Directo
donated 625 square meters of her share to defendant Noceda, who is her nephew being the
son of her deceased sister, Carolina (Exhibit D). However, on August 17, 1981, another
extrajudicial settlement-partition of Lot 1121 was executed by plaintiff Directo, defendant
Noceda, and Maria Arbizo. Three fifths of the said land went to Maria Arbizo while plaintiff
Directo and defendant Noceda got only one-fifth each. In said extrajudicial settlementpartition as well as in the Tax Declaration 16-0032 over Lot 1121 in the name of the late
Celestino Arbizo, the said parcel of land was said to have an area of only 29,845 square
meters (Exhibit C). Sometime in 1981, defendant Noceda constructed his house on the land
donated to him by plaintiff Directo. Plaintiff Directo fenced the portion allotted to her in the
extrajudicial settlement, excluding the donated portion, and constructed thereon three huts.
But in 1985, defendant Noceda removed the fence earlier constructed by plaintiff Directo,
occupied the three huts (3) and fenced the entire land of plaintiff Directo without her
consent. Plaintiff Directo demanded from defendant Noceda to vacate her land, but the
latter refused. Hence, plaintiff Directo filed the present suit, a complaint for the recovery of
possession and ownership and rescission/annulment of donation, against defendant Noceda
before the lower court. During the trial, the lower court ordered that a relocation survey of
Lot 1121 be conducted by Engr. Edilberto Quejada of the Bureau of Lands. After the survey
of Lot 1121 in the presence of both parties, Engr. Edilberto Quejada reported that the area
of Lot 1121 stated in the extrajudicial settlement-partition of August 17, 1981 was smaller
than the actual area of Lot 1121 which is 127,298 square meters. Engr. Quejada subdivided
Lot 1121, excluding the portions occupied by third persons, known as Lot 8, the salvage
zone and the road lot, on the basis of the actual occupancy of Lot 1121 by the heirs of the
late Celestino Arbizo and the extrajudicial settlement-partition of August 17, 1981. The
portion denominated as Lot A, with an area of 12,957 square meters was the share of
defendant Noceda; Lot C, with the same area as that of Lot A, was the share of plaintiff
Directo, a portion of which was donated to defendant Noceda; and Lot B, with an area of
38,872 square meters, went to Maria Arbizo (Exhibit E)." chanrobles virtual lawlibrary
On November 6, 1991, the Regional Trial Court, Branch 71, of Iba, Zambales rendered a
decision, the dispositive portion of which reads as follows: 4
"WHEREFORE, in view of the foregoing considerations, the Court hereby renders
judgment:chanrob1es virtual 1aw library
(a) Declaring the Extra-Judicial Settlement-Partition dated August 19, 1981, valid;

(b) Declaring the Deed of Donation dated June 1, 1981, revoked;


(c) Ordering the defendant to vacate and reconvey that donated portion of Lot 2, Lot 1121
subject of the Deed of Donation dated June 1, 1981 to the plaintiff or her heirs or assigns;
(d) Ordering the defendant to remove the house built inside the donated portion at the
defendants expense or pay a monthly rental of P300.00 Philippine Currency;
(e) Ordering the defendant to pay attorneys fees in the amount of P5,000.00; and
(f) To pay the cost."cralaw virtua1aw library
Rodolfo Nocedo appealed to the respondent Court which affirmed the trial court as follows:
5
"WHEREFORE, judgment is hereby rendered, ORDERING defendant Rodolfo Noceda to
VACATE the portion known as Lot "C" of Lot 1121 per Exhibit E, which was allotted to
plaintiff Aurora Arbizo Directo. Except for this modification, the Decision, dated November 6,
1991, of the RTC-Iba, Zambales, Branch 71, in Civil Case No. RTC-354-I, is hereby
AFFIRMED in all other respects. Costs against defendant Rodolfo Noceda."cralaw virtua1aw
library
Dissatisfied, petitioner filed the instant petition for review with the following assignment of
errors: 6
THE COURT OF APPEALS ERRED IN HOLDING THAT THE SUBJECT PROPERTY IDENTIFIED AS
LOT 1121 CONTAINS AN AREA IN EXCESS OF THAT STATED IN ITS TAX DECLARATION.
THE COURT OF APPEALS ERRED IN HOLDING THAT LOT 1121 SHOULD BE PARTITIONED IN
ACCORDANCE WITH THE EXTRA-JUDICIAL SETTLEMENT DATED 17 AUGUST 1981.
THE COURT OF APPEALS ERRED IN ADJUDICATING AND ALLOTTING LOT "C" AS APPEARING
IN THE SURVEY PLAN PREPARED BY GEODETIC ENGINEER EDILBERTO QUEJADA TO THE
RESPONDENT.
THE COURT OF APPEALS ERRED IN FINDING THAT THE PETITIONER USURPED AN AREA
ADJUDICATED TO THE RESPONDENT.
THE COURT OF APPEALS ERRED IN REVOKING THE DEED OF DONATION DATED 1 JUNE
1981.
The first issue raised refers to the actual area of the subject lot known as Lot 1121, which
was registered under Tax Declaration No. 16-0032 under the name of the late Celestino
Arbizo. Petitioner claims that Tax Declaration No. 16-0032 contains only an area of 29,845
sq. meter; thus the respondent Court exceeded its judicial authority when it sustained the
lower courts findings that the subject property actually contains an area of 127,289 square
meters.
We find the argument unmeritorious. The records disclose that the trial court in an Order
dated June 8, 1987 gave both parties to this case the chance to have the subject property
re-surveyed by a licensed surveyor to determine the actual area of Lot 1121. 7 Plaintiff
Aurora Directo filed a motion/compliance where she suggested that Geodetic Engineer
Edilberto V. Quejada of the Bureau of Lands, Iba, Zambales be commissioned to undertake

the survey 8 said motion was also sent to defendants counsel, Atty. Eufracio Pagunuran for
Comment, 9 but Atty. Pagunuran however failed to file his Comment within the given period.
Thus the trial court designated Engineer Quejada to undertake the survey of Lot 1121. 10
Petitioner Noceda through counsel belatedly filed his Comment without any opposition to the
appointment of Engineer Quejada but proposed that the latter be tasked to solely (a) resurvey, determine and identify the metes and bounds of the lot covered by Tax Declaration
No. 16-0032; (b) to identify the areas occupied by the parties therein; and (c) to conduct
the re-survey with notice and in the presence of the parties therein and their respective
counsels. 11 The Comment was not, however, acted upon by the trial court in view of its
earlier Order directing Engineer Quejada to undertake the survey of the land. 12 Engr.
Quejada conducted the survey with the conformity and in the presence of both parties,
taking into consideration the extrajudicial partition dated August 17, 1981, deed of donation
dated June 1, 1981 executed by plaintiff Aurora Directo in favor of defendant Rodolfo
Noceda and the actual area occupied by the parties, 13 as well as the sketch plan 14 and
the technical description of Lot 1121 taken from the Records Section of the Bureau of Lands,
Manila. 15 The report and the survey plan submitted by Engr. Quejada were approved by
the Trial Court in an Order dated December 7, 1987. 16 These circumstances show that the
lower court ordered the re-survey of the lot to determine the actual area of Lot 1121 and
such survey was done with the conformity and in the presence of both parties. The actual
land area based on the survey plan which was conducted in the presence of both parties,
showed a much bigger area than the area declared in the tax declaration but such
differences are not uncommon as early tax declarations are, more often than not, based on
approximation or estimation rather than on computation. 17 We hold that the respondent
court did not err in sustaining the trial courts findings that the actual area of Lot 1121 is
127,289 square meters.cralawnad
Petitioner also contends that said judicial determination improperly encroaches on the rights
and claims of third persons who were never impleaded below; that the subject lot was also
declared in the name of one Cecilia Obispo and a Free Patent over the said lot was also
issued in her name and that there are several residential houses constructed and existing on
Lot 8 of lot 1121, thus these possessors/occupants of Lot 8 should be joined as defendants
for their non-inclusion would be fatal to respondents cause of action.
We find no merit in this argument. The respondent Court correctly ratiocinated on this issue
as follows: 18
"The fact that Cecilia Obispo has tax declarations in her name over Lot 1121 and several
persons occupied a portion thereof did not make them indispensable parties in the present
case. Defendant Noceda merely presented the tax declarations in the name of Cecilia Obispo
without the alleged free patent in her name. Moreover, no evidence was presented showing
that Cecilia Obispo possessed or claimed possession of Lot 1121. Tax receipts and
declarations of ownership for tax purposes are not conclusive evidence of ownership of
property (Republic v. Intermediate Appellate Court, 224 SCRA 285).
It was not necessary that the occupants of a portion of Lot 1121, designated as Lot 8, be
impleaded in the present case. Lot 8, though part of Lot 1121, was excluded by Engr.
Quejada in determining the respective portions of Lot 1121 occupied by plaintiff Directo,
defendant Noceda and Maria Arbizo pursuant to the extrajudicial settlement which they
executed on August 17, 1981. The result of the present suit shall not in any way affect the
occupants of Lot 8, since the issues involved in the present case are the usurpation by
defendant Noceda of the land adjudicated to plaintiff Directo and the propriety of the
cancellation of the deed of donation in favor of defendant Noceda due to his ingratitude to
plaintiff Directo."cralaw virtua1aw library

Notably, defendants counsel requested for the appearance of Cecilia Obispo and despite
notice to her to appear in court and bring with her the alleged free patent in her name, 19
she failed to appear and even failed to intervene to protect whatever interest and right she
has over the subject lot. As to the other possessors of residential houses in Lot 8 of Lot
1121, they are not considered as indispensable parties to this case. A party is not
indispensable to the suit if his interest in the controversy or subject matter is distinct and
divisible from the interest of the other parties and will not necessarily be prejudiced by a
judgment which does complete justice to the parties in court. 20 Private respondent is not
claiming the entire area of Lot 1121 but only a portion thereof which was adjudicated to her
based on the August 17, 1981 extrajudicial settlement and which was denominated in the
survey plan as Lot C of Lot 1121; thus there was no need to implead the occupants of Lot 8.
Petitioner further claims that the subject property could not be partitioned based on the
extrajudicial settlement-partition dated August 17, 1981, since the distributive share of the
heirs of the late Celestino Arbizo and the area of Lot 1121 stated therein were different from
the extrajudicial settlement executed on June 1, 1981; that the discrepancies between the
two deeds of partition with respect to the area of Lot 1121 and the respective share of the
parties therein indicated that they never intended that any of the deeds to be the final
determination of the portions of Lot 1121 allotted to them; that the extrajudicial settlementpartition of August 17, 1981 could not effectively subdivide Lot 1121 because it partitioned
only 29,845 square meters, and not its actual area of 127,298 square meters.
We see no cogent reason to disturb the findings of the respondent Court as follows: 21
The discrepancies between the extrajudicial settlements executed by plaintiff Directo,
defendant Noceda and Maria Arbizo on June 1, 1981 and August 17, 1981 only meant that
the latter was intended to supersede the former. The signature of defendant Noceda in the
extrajudicial settlement of August 17, 1981 would show his conformity to the new
apportionment of Lot 1121 among the heirs of the late Celestino Arbizo. The fact that
defendant Noceda occupied the portion allotted to him in the extrajudicial settlement, as
well as the donated portion of the share of plaintiff Directo, presupposes his knowledge of
the extent of boundaries of the portion of Lot 1121 allotted to him. Moreover, the statement
in the extrajudicial settlement of August 17, 1981 with respect to the area of Lot 1121,
which was 29,845 square meters, is not conclusive because it was found out, after the
relocation survey was conducted on Lot 1121, that the parties therein occupied an area
larger than what they were supposed to possess per the extrajudicial settlement- partition
of August 17, 1981.chanrobles lawlibrary : rednad
Although in the extrajudicial settlement dated August 17, 1981 the heirs of Celestino Arbizo
partitioned only a 29,845 square meter lot to conform with the area declared under tax
declaration 16-0032 yet the heirs were each actually occupying a bigger portion the total
area of which exceeded 29,845 square meters. This was confirmed by Geodetic Engineer
Quejada in his report submitted to the trial court where he stated among other things: 22
7. that upon computation of actual survey, it is informed (sic) that the area dated (sic) as
per extrajudicial settlement-partition in the name of Celestino Arbizo was smaller than the
computed lots of their actual occupancy as per survey on the ground;
8. The Lot A, Lot B, and Lot C as appearing on prepared plan for ready reference was
subdivided, base (sic) on stated sharing as per EXTRA JUDICIAL SETTLEMENT-PARTITION
base (sic) on actual occupancy.

The survey conducted on Lot 1121 was only a confirmation of the actual areas being
occupied by the heirs taking into account the percentage proportion adjudicated to each heir
on the basis of their August 17, 1981 extrajudicial settlement.
Petitioner further alleges that the said partition tries to vest in favor of a third person, Maria
Arbizo, a right over the said property notwithstanding the absence of evidence establishing
that she is an heir of the late Celestino Arbizo since Maria Arbizo was never impleaded as a
party in this case and her interest over Lot 1121 was not established.
Such contention deserves scant consideration. We find no compelling basis to disturb the
finding of the trial court on this factual issue, as follows: 23
In effect, the defendant denies the allegation of the plaintiff that Maria Arbizo was the third
wife of Celestino Arbizo and Agripina is her half sister with a common father. On this point,
the Court believes the version of the plaintiff. The Court observes that in the "Extra-Judicial
Settlement-Partition" (Exhibit "C"), Maria Arbizo is named one of the co-heirs of the
defendant, being the widow of his grandfather, Celestino Arbizo. The names of Anacleto and
Agripina do not also appear in the Extra-judicial Settlement and Partition because according
to the plaintiff, they had sold their shares to Maria Arbizo. And the defendant is one of the
signatories to the said Deed of Extra-judicial Settlement-Partition acknowledged before
Notary Public Artemio Maranon. Under the circumstances, the Court is convinced that the
defendant knew that Maria Arbizo was the widow of Celestino Arbizo and he knew of the
sale of the share of Anacleto Arbizo his share, as well as that of Agripina. When the
defendant signed the Extra-Judicial Settlement, he was already an adult since when he
testified in 1989, he gave his age as 50 years old. So that in 1981, he was already 41 years
old. If he did not know all of these, the defendant would have not agreed to the sharing and
signed this document and acknowledged it before the Notary Public. And who could have a
better knowledge of the relationship of Agripina and Maria Arbizo to Celestino Arbizo than
the latters daughter? Besides, at the time of the execution of the Extra-Judicial SettlementPartition by the plaintiff and defendant, they were still in good terms. There was no reason
for the plaintiff to favor Maria Arbizo and Agripina Arbizo over the defendant. Furthermore,
the defendant had failed to support his allegation that when his grandfather died he had no
wife and child.chanrobles virtual lawlibrary
We likewise find unmeritorious petitioners claim that there exist no factual and legal basis
for the adjudication of Lot C of Lot 1121 to private respondent Aurora Directo. It bears
stress that the relocation survey plan prepared by Geodetic Engineer Quejada was based on
the extrajudicial settlement dated August 17, 1981, and the actual possession by the parties
and the technical description of Lot 1121. It was established by the survey plan that based
on the actual possession of the parties, and the extrajudicial settlement among the heirs the
portion denominated as Lot C of Lot 1121 of the survey plan was being occupied by private
respondent Aurora Directo and it was also shown that it is in Lot C where the 625 square
meter area donated by private respondent Directo to petitioner is located. There is no
obstacle to adjudicate Lot C to private respondent as her rightful share allotted to her in the
extrajudicial settlement.
Petitioner argues that he did not usurp the property of respondent Directo since, to date,
the metes and bounds of the parcel of land left by their predecessor in interest, Celestino
Arbizo, are still undetermined since no final determination as to the exact areas properly
pertaining to the parties herein; hence they are still considered as co-owners thereof.
We do not agree.

In this case the source of co-ownership among the heirs was intestate succession. Where
there are two or more heirs, the whole estate of the decedent is, before its partition, owned
in common by such heirs subject to the payment of debts of the deceased. 24 Partition, in
general, is the separation, division and assignment of a thing held in common among those
to whom it may belong 25 The purpose of partition is to put an end to co-ownership. It
seeks a severance of the individual interest of each co-owner, vesting in each a sole estate
in specific property and giving to each one a right to enjoy his estate without supervision or
interference from the other. 26 And one way of effecting a partition of the decedents estate
is by the heirs themselves extrajudicially. The heirs of the late Celestino Arbizo namely
Maria Arbizo, Aurora A. Directo (private respondent) and Rodolfo Noceda (petitioner)
entered into an extrajudicial settlement of the estate on August 17, 1981 and agreed to
adjudicate among themselves the property left by their predecessor-in-interest in the
following manner:chanrob1es virtual 1aw library
To Rodolfo Noceda goes the northern one-fifth (1/5) portion containing an area of 5,989 sq.
meters;
To Maria Arbizo goes the middle three-fifths (3/5) portion;
and . . . To Aurora Arbizo goes the southern one-fifth (1/5) portion. 27
In the survey plan submitted by Engineer Quejada, the portions indicated by red lines and
numbered alphabetically were based on the percentage proportion in the extrajudicial
settlement and the actual occupancy of each heir which resulted to these divisions as
follows: 28
Lot A; the area is 2,957 sq.m. goes to Rodolfo A. Noceda (1/5)
Lot B; 38,872 sq.m. Maria Arbizo (3/5)chanrobles law library : red
Lot C 12,957 sq.m. Aurora Arbizo (1/5)
Thus, the areas allotted to each heir are now specifically delineated in the survey plan.
There is no co-ownership where portion owned is concretely determined and identifiable,
though not technically described, or that said portions are still embraced in one and the
same certificate of title does not make said portions less determinable or identifiable, or
distinguishable, one from the other, nor that dominion over each portion less exclusive, in
their respective owners. 29 A partition legally made confers upon each heir the exclusive
ownership of the property adjudicated to him. 30
We also find unmeritorious petitioners argument that since there was no effective and real
partition of the subject lot there exists no basis for the charge of usurpation and hence
there is also no basis for finding ingratitude against him. It was established that petitioner
Noceda occupied not only the portion donated to him by private respondent Aurora ArbizoDirecto but he also fenced the whole area of Lot C which belongs to private respondent
Directo, thus petitioners act of occupying the portion pertaining to private respondent
Directo without the latters knowledge and consent is an act of usurpation which is an
offense against the property of the donor and considered as an act of ingratitude of a donee
against the donor. 31
The law does not require conviction of the donee; it is enough that the offense be proved in
the action for revocation. 32

Finally, petitioner contends that granting revocation is proper, the right to enforce the same
had already prescribed since as admitted by private respondent, petitioner usurped her
property in the first week of September 1985 while the complaint for revocation was filed on
September 16, 1986, thus more than one (1) year had passed from the alleged usurpation
by petitioner of private respondents share in Lot 1121. We are not persuaded. The
respondent Court rejected such argument in this wise:jgc:chanrobles.com.ph
"Article 769 of the New Civil Code states that: "The action granted to the donor by reason of
ingratitude cannot be renounced in advance. This action prescribes within one year to be
counted from the time the donor had knowledge of the fact and it was possible for him to
bring the action." As expressly stated, the donor must file the action to revoke his donation
within one year from the time he had knowledge of the ingratitude of the donee. Also, it
must be shown that it was possible for the donor to institute the said action within the same
period. The concurrence of these two requisites must be shown by defendant Noceda in
order to bar the present action. Defendant Noceda failed to do so. He reckoned the one year
prescriptive period from the occurrence of the usurpation of the property of plaintiff Directo
in the first week of September, 1985, and not from the time the latter had the knowledge of
the usurpation. Moreover, defendant Noceda failed to prove that at the time plaintiff Directo
acquired knowledge of his usurpation, it was possible for plaintiff Directo to institute an
action for revocation of her donation." chanrobles virtual lawlibrary
The action to revoke by reason of ingratitude prescribes within one (1) year to be counted
from the time (a) the donor had knowledge of the fact; (b) provided that it was possible for
him to bring the action. It is incumbent upon petitioner to show proof of the concurrence of
these two conditions in order that the one (1) year period for bringing the action be
considered to have already prescribed. No competent proof was adduced by petitioner to
prove his allegation. In Civil Cases, the party having the burden of proof must establish his
case by preponderance of evidence. 33 He who alleges a fact has the burden of proving it
and a mere allegation is not evidence. 34
Factual findings of the Court of Appeals, supported by substantial evidence on record are
final and conclusive on the parties and carry even more weight when the Court of Appeals
affirms the factual findings of the trial court; 35 for it is not the function of this Court to reexamine all over again the oral and documentary evidence submitted by the parties unless
the findings of fact of the Court of Appeals are not supported by the evidence on record or
the judgment is based on the misapprehension of facts. 36 The jurisdiction of this court is
thus limited to reviewing errors of law unless there is a showing that the findings
complained of are totally devoid of support in the record or that they are so glaringly
erroneous as to constitute serious abuse of discretion. 37 We find no such showing in this
case.
We find that both the trial court and the respondent Court had carefully considered the
questions of fact raised below and the respondent Courts conclusions are based on the
evidence on record. No cogent reason exists for disturbing such findings. 38 We also note
that petitioner in this petition merely rehashed the same issues and arguments raised in the
respondent Court in whose decision we find no reversible error. Clearly, petitioner failed to
present any substantial argument to justify a reversal of the assailed decision.
WHEREFORE, the petition for review is hereby DENIED. Costs against Appellant.
SO ORDERED.
108. Heirs of Cesario Velasquez v. Court of Appeals (325 SCRA 552)

FACTS: Spouses Leoncia de Guzman and Cornelio Aquino died intestate and were childless.
Leoncia de Guzman was survived by her sisters Anatalia de Guzman (mother of the
plaintiffs) and Tranquilina de Guzman (grandmother of the defendants). Sometime in 1989,
the heirs of Anatalia de Guzman, all surnamed Meneses, filed a complaint for annulment,
partition and damages against the heirs of Cesario Velasquez (son of Tranquilina de
Guzman) for the latters refusal to partition the conjugal properties of the Spouses Aquino.
The complaint alleged that Leoncia de Guzman, before her death, had a talk with Anatalia
de Guzman, Santiago Meneses and Tranquilina de Guzman and his son Cesario Velasquez in
attendance, that the documents of donation and partition which she and her husband earlier
executed were not signed by them as it was not their intention to give away all the
properties to Cesario Velasquez because Anatalia de Guzman had several children to
support. They further alleged that Cesario Velasquez together with his mother promised to
divide the properties equally and to give the plaintiffs one-half (1/2) thereof. However, after
the death of Leoncia, defendants forcibly took possession of all the properties and despite
plaintiffs repeated demands for partition, defendants refused. The defendants denied all the
allegations.
ISSUES:
1. Whether or not the petitioners have acquired absolute and exclusive ownership of the
properties in question.
2. Whether or not the properties in question can be the subject of an action for partition.
HELD:
1. A donation as a mode of acquiring ownership results in an effective transfer of title over
the property from the donor to the donee and the donation is perfected from the moment
the donor knows of the acceptance by the donee. And once a donation is accepted, the
donee becomes the absolute owner of the property donated. The donation of the first parcel
made by the Aquino spouses to petitioners Jose and Anastacia Velasquez who were then
nineteen (19) and ten (10) years old respectively was accepted through their father Cesario
Velasquez, and the acceptance was incorporated in the body of the same deed of donation
and made part of it, and was signed by the donor and the acceptor. Legally speaking there
was delivery and acceptance of the deed, and the donation existed perfectly and irrevocably.
The donation inter vivos may be revoked only for the reasons provided in Articles 760, 764
and 765 of the Civil Code. The donation propter nuptias in favor of Cesario Velasquez and
Camila de Guzman over the third and sixth parcels including a portion of the second parcel
became the properties of the spouses Velasquez since 1919. The deed of donation propter
nuptias can be revoked by the non-performance of the marriage and the other causes
mentioned in article 86 of the Family Code. The alleged reason for the repudiation of the
deed, i.e., that the Aquino spouses did not intend to give away all their properties since
Anatalia (Leoncias sister) had several children to support is not one of the grounds for
revocation of donation either inter vivos or propter nuptias, although the donation might be
inofficious.
2. In actions for partition, the court cannot properly issue an order to divide the property
unless it first makes a determination as to the existence of co-ownership. The court must
initially settle the issue of ownership, the first stage in an action for partition. Needless to
state, an action for partition will not lie if the claimant has no rightful interest over the
subject property. In fact, Section 1 of Rule 69 requires the party filing the action to state in
his complaint the "nature and the extent of his title" to the real estate. Until and unless the
issue of ownership is definitely resolved, it would be premature to effect a partition of the
properties.

109. Gonzales v. Court of Appeals (358 SCRA 598)191 192


G.R. No. 110335. June 18, 2001
IGNACIO GONZALES, LILIA R. GONZALES, GUSTAVO R. GONZALES, WIGBERTO R.
GONZALES, GILDA GONZALES-SALUTA, FERNANDO RAMIREZ, OCTAVIO RAMIREZ,
JR., IGNACIO RAMIREZ, ESMIRNA RAMIREZ, MERCEDES GONZALES-FAVIZ, JAIME
GONZALES, FEDERICO GONZALES, ROSARIO GONZALES, PATRICIA GONZALES,
DANIEL GONZALES, ALDO GONZALES, CLAUDIA GONZALES and AMANDA
GONZALES, Petitioners, v. HONORABLE COURT OF APPEALS, ESTANISLAO SALVADOR,
MATEO SALVADOR, ALBERTO SARMIENTO, MAXIMO ESGUERRA, MAMERTO ANTONIO,
VIRGILIO DE GUZMAN, ANGEL FAJARDO, ABAD DELA CRUZ, PEDRO FAJARDO, JUANITO DE
LARA, ELIGIO DE GUZMAN, SALVADOR MARTINEZ, EDUARDO DELA CRUZ, JOSE MATIAS,
SOLEDAD ESTRELLA, ROMAN GUINGON, CIRILO SALVADOR, CATALINA DELA CRUZ,
BERNARDO ESGUERRA, JR., GLORIA CABANA, PAQUITO CHAVEZ, RENATO GARCIA,
FRANCISCO PASCUAL, WALDO SALVADOR, MARIO SALVADOR, PEDRO GARCIA, ALBINO
SALVADOR, ANTONIO DE GUZMAN, AMBROCIO SALVADOR, TERESITA CAPATE, EDUARDO
TALENS, BENIGNO CARAIG, ERNESTO BERNABE, SERGIO CARLOS, SIMEON BALINGAY,
ANTONIO NANGEL, TEOFILO BINUYA and WILFREDO DELA CRUZ, Respondents.
DECISION
MELO, J.:
Per A.M. No. 00-9-03-SC dated February 27, 2001, this case which could have been acted
upon earlier, was raffled to undersigned ponente. Essentially, petitioners seek to annul and
set aside the decision dated March 15, 1993 of the Court of Appeals in its CA-G.R. SP
No.26416 which reversed the ruling of then Secretary of Agrarian Reform Benjamin T.
Leong, as well as the order dated May 17, 1993 denying reconsideration thereof.
The factual antecedents of the instant case may be chronicled as follows:
The now deceased spouses Ignacio Gonzales and Marina Gonzales were the registered
owners of two parcels of agricultural Land situated at Barrio Fortaleza, Cabanatuan City,
covered by Transfer Certificate of Title No. 2742 and denominated as Lot 551-C and Lot
552-A. Lot 551-C contains an area of 46.97 hectares while Lot 552-A contains an area of
37.5735 hectares. Herein petitioners are the successors-in-interest or the children and
grandchildren of said Gonzales spouses. On the other hand, private respondents are the
farmers and tenants of said spouses who have been cultivating the parcels of land even
before World War II either personally or through their predecessors-in-interest.
On May 7, 1969, Marina Gonzales died intestate and appointed as administratrix of her
estate was petitioner Lilia Gonzales. Prior to the partition of said estate, Ignacio Gonzales
executed a Deed of Donation on July 12, 1972 conveying his share of the property,
specifically Lot No. 551-C, in favor of his 14 grandchildren. The said donation was not
registered. Thus, when Presidential Decree No. 27 (P.D. No. 27) took effect on October 21,
1972, the landholdings of the spouses Gonzales were placed under Operation Land Transfer
by virtue of said decree, and private respondents were accordingly issued the corresponding
Certificates of Land Transfer and Emancipation Patents. On March 5, 1974, the
administratrix Lilia Gonzales filed an application for retention with the then Ministry of
Agrarian Reform, requesting that their property be excluded from the coverage of Operation
Land Transfer. After initial investigation, Hearing Officer Melchor Pagsolingan recommended

the denial of said application for retention and this action was affirmed by Assistant
Secretary of Agrarian Reform Benjamin Labayen, in an order dated September 12, 1977.
Apparently, however, a reinvestigation was conducted, resulting in the present Department
of Agrarian Reform (DAR) resolution dated February 23, 1983 recommending that the land
subject of the deed of donation, or Lot No. 551-C, be exempt from Operation Land Transfer.
On September 3, 1991, DAR Secretary Benjamin Leong issued an order declaring that the
subject landholdings covered by the deed of donation are exempt from Operation Land
Transfer, and cancelling the Certificates of Land Transfer issued in favor of private
respondents. In so ruling, the DAR Secretary reasoned:
As the donation had been duly accepted by the donees who were already of legal age
on the date of the donation and by the legal guardians of the donees who were still
minors at that time, and the donor having known of said acceptance, the donation had
therefore been perfected in accordance with the law, and the donees had acquired a
valid title to the portion donated on the date the instrument was executed.
(p. 4, DAR Order.)
Aggrieved by this ruling, private respondents filed a petition for certiorari with the Court of
Appeals which rendered its decision on March 15, 1993, reversing the action of the DAR and
upholding the certificates of land transfer and emancipation patents.
Petitioners moved for a reconsideration of the above decision but the same was denied by
the Court of Appeals in its Resolution dated May 17, 1993.
Thus, the instant petition anchored on the following grounds:
A. the CA failed to reconsider that the land subject of this case does not fall within the
purview of P.D. 27;
B. the CA should have found that the evidence clearly shows that the tenants (private
respondents herein) were aware that the land had been donated by Ignacio Gonzales in
favor of his grandchildren prior to the effectivity of P.D. 27; and
C. the effect of non-registration under the land registration laws are inapplicable to the
present case.
The first and third assigned errors, being interrelated, shall be jointly discussed.
The sole issue to be resolved is whether the property subject of the deed of donation which
was not registered when P.D. No. 27 took effect, should be excluded from the Operation
Land Transfer.
Petitioners insist that the deed of donation executed by Ignacio Gonzales validly transferred
the ownership and possession of Lot 551-C which comprises an area of 46.97 hectares to
his 14 grandchildren. They further assert that inasmuch as Lot 551-C had already been
donated, the same can no longer fall within the purview of P.D. No. 27, since each donee
shall have a share of about three hectares only which is within the exemption limit of seven
hectares for each landowner provided under P.D. No. 27.

Article 749 of the Civil Code provides inter alia that "in order that the donation of an
immovable may be valid, it must be made in a public document, specifying therein the
property donated and the value of the charges which the donee must satisfy." Corollarily,
Article 709 of the same Code explicitly states that "the titles of ownership, or other rights
over immovable property, which are not duly inscribed or annotated in the Registry of
property shall not prejudice third persons." From the foregoing provisions, it may be
inferred that as between the parties to a donation of an immovable property, all that is
required is for said donation to be contained in a public document. Registration is not
necessary for it to be considered valid and effective. However, in order to bind third persons,
the donation must be registered in the Registry of Property (now Registry of Land Titles and
Deeds). Although the non-registration of a deed of donation shall not affect its validity, the
necessity of registration comes into play when the rights of third persons are affected, as in
the case at bar.
It is actually the act of registration that operates to convey registered land or affect title
thereto. Thus, Section 50 of Act No. 496 (Land Registration Act), as amended by Section 51
of P.D. No. 1529 (Property Registration Decree), provides:
SEC. 51. Conveyance and other dealings by registered owner - . . . But no deed,
mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect
registered land, shall take effect as a conveyance or bind the land, but shall operate only as
a contract between the parties and as evidence of authority to the Register of Deeds to
make registration.
The act of registration shall be the operative act to convey or affect the land insofar as third
persons are concerned, . . .
Further, it is an entrenched doctrine in our jurisdiction that registration in a public registry
creates constructive notice to the whole world (Olizon vs. Court of Appeals, 236 SCRA 148
[1994]). Thus, Section 51 of Act No.496, as amended by Section 52 of P.D. No. 1529,
provides:
SEC. 52. Constructive notice upon registration - Every conveyance, mortgage, lease,
lien, attachment, order, judgment, instrument or entry affecting registered land shall, if
registered, filed or entered in the Office of the Register of Deeds for the province or city
where the land to which it relates lies, be constructive notice to all persons from the time of
such registering, filing or entering.
It is undisputed in this case that the donation executed by Ignacio Gonzales in favor of his
grandchildren, although in writing and duly notarized, has not been registered in accordance
with law. For this reason, it shall not be binding upon private respondents who did not
participate in said deed or had no actual knowledge thereof. Hence, while the deed of
donation is valid between the donor and the donees, such deed, however, did not bind the
tenants-farmers who were not parties to the donation. As previously enunciated by this
Court, non-registration of a deed of donation does not bind other parties ignorant of a
previous transaction (Sales vs. Court of Appeals, 211 SCRA 858 [1992]). So it is of no
moment that the right of the tenants-farmers in this case was created by virtue of a decree
or law. They are still considered "third persons" contemplated in our laws on registration, for
the fact remains that these tenants-farmers had no actual knowledge of the deed of
donation.

From the foregoing, the ineluctable conclusion drawn is that the unregistered deed of
donation cannot operate to exclude the subject land from the coverage of the Operation
Land Transfer of P.D. No. 27, which took effect on October 21, 1972. To rule otherwise
would render ineffectual the rights and interests that the tenants-farmers immediately
acquired upon the promulgation of P.D. No. 27, especially so because in the case at bar,
they have been cultivating the land even before World War II. Accordingly, the Certificates
of Land Transfer and the Emancipation Patents respectively issued to private respondents
over the land in question cannot be cancelled. It should be noted that one of the recognized
modes of acquiring title to land is by emancipation patent which aims to ameliorate the sad
plight of tenants-farmers. By virtue of P.D. No. 27, tenants-farmers are deemed owners of
the land they till. This policy is intended to be given effect by a provision of the law which
declares that, "the tenant-farmer, whether in land classified as landed estate or not, shall be
DEEMED OWNER of a portion constituting a family size farm of five (5) hectares if not
irritated and three (3) hectares if irrigated" (P.D. No. 27, third paragraph). It may,
therefore, be said that with respect to Lot 551-C, private respondents became owners
thereof on October 27, 1972, the day P.D. No. 27 took effect.
The second error assigned deals with a question of fact. We have consistently ruled that it is
not the function of this Court to assess and evaluate the evidence all over again, its
jurisdiction being generally limited to reviewing errors of law that might have been
committed by the lower court. Nevertheless, since the factual findings of the Court of
Appeals are at variance with those of an administrative agency such as the Department of
Agrarian Reform, we are compelled to review the records presented both in the Court of
Appeals and the said Department (Deiparine vs. Court of Appeals, 299 SCRA 668 [1998]).
Moreover, in the exercise of sound discretion and considering the fact that the parties have
relentlessly pursued this case since 1974 or for a period of 27 years already, this Court has
opted to look into the factual bases of the assailed decision of the Court of Appeals.
Petitioners maintain that private respondents knew of the donation as evidenced by the
affidavit and testimony of Francisco Villanueva and Abad Dela Cruz. This contention is
unacceptable. Villanueva testified that as the overseer of Ignacio Gonzales, he was tasked
to inform his co-tenants about the donation. However, the records show that Villanueva has
transferred his right to cultivate the land to a certain Bemardo Esguerra as early as 1965 (p.
203, Rollo), leading one to logically conclude that Villanueva was no longer a tenant, much
more an overseer, when the donation was executed in 1972. On the other hand, Dela Cruz,
in an Affidavit executed on May 28, 1992, denied testifying before Atty. Romeo Bello at the
Office of the Department of Agrarian Reform to the effect that he and his co-tenants were
aware of the donation. He declared that he had no knowledge of the donation made by
Ignacio Gonzales, nor did he have any idea that an investigation was conducted by DAR on
said matter (pp. 204-205, Rollo).
Likewise, petitioners claim that private respondents had been sharing their produce with the
donees or the grandchildren of Ignacio Gonzales, suggesting thereby that private
respondents have recognized the donees as the new owners of the land. Again, we find this
argument to be unfounded. The evidence on record reveals that the tenants-farmers paid
their rentals to Ignacio Gonzales and not to the grandchildren (pp. 150-194, Rollo).
Petitioners contend that the deed of donation was not registered because of the pendency of
the intestate proceedings. This argument was correctly rejected by the Court of Appeals, in
this wise:

We do not agree with respondents that the failure to register the deed of donation was due
to the pendency of the intestate proceedings and the fact that the property had been
mortgaged to the Philippine National Bank (PNB), because the pendency of the intestate
proceedings and the real estate mortgaged to the PNB, do not preclude the registration
annotation of the donation at the back of the certificate of title covering the land.
(p. 4, Court of Appeals Decision.)
Thus, we affirm the conclusion of the appellate court that the land subject of the donation is
covered by Operation Land Transfer. The findings of fact made by the Court of Appeals are
conclusive and binding on the Supreme Court even if contrary to these of the trial court or
the administrative agency, so long as such findings are supported by the records or based
on substantial evidence (Tabaco vs. Court of Appeals, 239 SCRA 485 [1994]). While the
foregoing doctrine is not absolute, petitioners have not sufficiently proved that the findings
complained of are totally devoid of support in the records, or that they are so glaringly
erroneous as to constitute serious abuse of discretion.
As a final note, our laws on agrarian reform were enacted primarily because of the
realization that there is an urgent need to alleviate the lives of the vast number of poor
farmers in our country. Yet, despite such laws, the majority of these farmers still live on a
hand-to-mouth existence. This can be attributed to the fact that these agrarian laws have
never really been effectively implemented. Certain individuals have continued to prey on the
disadvantaged, and as a result, the farmers who are intended to be protected and uplifted
by the said laws find themselves back in their previous plight or even in a more distressing
situation. This Court ought to be an instrument in achieving a dignified existence for these
farmers free from pernicious restraints and practices, and theres no better time to do it than
now.
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals dated March
15, 1993 in CA-G.R. SP No. 26416 is hereby AFFIRMED.
SO ORDERED.
110. Imperial v. Court of Appeals (316 SCRA 393)193 194
G.R. No. 112483. October 8, 1999.]
ELOY IMPERIAL, Petitioner, v. COURT OF APPEALS, REGIONAL TRIAL COURT OF
LEGASPI CITY, CESAR VILLALON, JR., TERESA VILLALON, ANTONIO VILLALON,
AUGUSTO VILLALON, ROBERTO VILLALON, RICARDO VILLALON and ESTHER
VILLALON, Respondents.
DECISION
GONZAGA-REYES, J.:
Petitioner seeks to set aside the Decision of the Court of Appeals in C.A.-G.R. CV No. 31976
1 , affirming the Decision of the Regional Trial Court of Legazpi City 2 , which rendered
inofficious the donation made by Leoncio Imperial in favor of herein petitioner, to the extent
that it impairs the legitime of Victor Imperial, and ordering petitioner to convey to herein

private respondents, heirs of said Victor Imperial, that portion of the donated land
proportionate to Victor Imperials legitime.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
Leoncio Imperial was the registered owner of a 32,837-square meter parcel of land covered
by Original Certificate of Title No. 200, also known as Lot 45 of the Cadastral Survey of
Albay. On July 7, 1951, Leoncio sold the said lot for P1.00 to his acknowledged natural son,
petitioner herein, who then acquired title over the land and proceeded to subdivide it into
several lots. Petitioner and private respondents admit that despite the contracts designation
as one of "Absolute Sale", the transaction was in fact a donation.
On July 28, 1953, or barely two years after the donation, Leoncio filed a complaint for
annulment of the said Deed of Absolute Sale, docketed as Civil Case No. 1177, in the then
Court of First Instance of Albay, on the ground that he was deceived by petitioner herein
into signing the said document. The dispute, however, was resolved through a compromise
agreement, approved by the Court of First Instance of Albay on November 3, 1961 3 , under
which terms: (1) Leoncio recognized the legality and validity of the rights of petitioner to the
land donated; and (2) petitioner agreed to sell a designated 1,000-square meter portion of
the donated land, and to deposit the proceeds thereof in a bank, for the convenient disposal
of Leoncio. In case of Leoncios death, it was agreed that the balance of the deposit will be
withdrawn by petitioner to defray burial costs.
On January 8, 1962, and pending execution of the above judgment, Leoncio died, leaving
only two heirs the herein petitioner, who is his acknowledged natural son, and an adopted
son, Victor Imperial. On March 8, 1962, Victor was substituted in place of Leoncio in the
above-mentioned case, and it was he who moved for execution of judgment. On March 15,
1962, the motion for execution was duly granted.
Fifteen years thereafter, or on July 26, 1977, Victor died single and without issue, survived
only by his natural father, Ricardo Villalon, who was a lessee of a portion of the disputed
land. Four years hence, or on September 25, 1981, Ricardo died, leaving as his only heirs
his two children, Cesar and Teresa Villalon.
Five years thereafter, or sometime in 1986, Cesar and Teresa filed a complaint for
annulment of the donation with the Regional Trial Court of Legazpi City, docketed as Civil
Case No. 7646. Petitioner moved to dismiss on the ground of res judicata, by virtue of the
compromise judgment rendered by the Court of First Instance of Albay. The trial court
granted the motion to dismiss, but the Court of Appeals reversed the trial courts order and
remanded the case for further proceedings.
On October 18, 1989, Cesar and Teresa filed an amended complaint in the same case, Civil
Case No. 7646, for "Annulment of Documents, Reconveyance and Recovery of Possession"
with the Regional Trial Court of Legazpi City, seeking the nullification of the Deed of Absolute
Sale affecting the above property, on grounds of fraud, deceit and inofficiousness. In the
amended complaint, it was alleged that petitioner caused Leoncio to execute the donation
by taking undue advantage of the latters physical weakness and mental unfitness, and that
the conveyance of said property in favor of petitioner impaired the legitime of Victor
Imperial, their natural brother and predecessor-in-interest. 4
In his Answer, petitioner: (1) alleged that Leoncio had conveyed sufficient property to Victor
to cover his legitime, consisting of 563 hectares of agricultural land in Manito, Albay; (2)
reiterated the defense of res judicata, and (3) raised the additional defenses of prescription
and laches.

Plaintiff Cesar Villalon died on December 26, 1989, while the case was pending in the
Regional Trial Court, and was substituted in this action by his sons, namely, Antonio,
Roberto, Augusto, Ricardo and Cesar, Jr., all surnamed Villalon, and his widow, Esther H.
Villalon.
The RTC held the donation to be inofficious and impairing the legitime of Victor, on the basis
of its finding that at the time of Leoncios death, he left no property other than the 32,837square meter parcel of land which he had donated to petitioner. The RTC went on further to
state that petitioners allegation that other properties existed and were inherited by Victor
was not substantiated by the evidence. 5
The legitime of Victor was determined by the trial court in this manner:chanrob1es virtual
1aw library
Considering that the property donated is 32,837 square meters, one half of that or 16,418
square meters becomes the free portion of Leoncio which could be absorbed in the donation
to defendant. The other half, which is also 16,418 square meters is where the legitime of
the adopted son Victor Imperial has to be taken.
The proportion of the legitime of the legitimate child (including the adopted child) in relation
to the acknowledged natural child (defendant) is 10 is to 5[,] with the acknowledged natural
child getting of the legitime of the legitimate (adopted) child, in accordance with Art. 895
of the New Civil Code which provides:chanrobles.com:cralaw:red
"The legitime of each of the acknowledged natural children and each of the natural children
by legal fiction shall consist of one-half of the legitime of each of the legitimate children or
descendants."cralaw virtua1aw library
From the 16,418 square meters left (after the free portion has been taken) plaintiffs are
therefore entitled to 10,940 square meters while defendant gets 5,420 square meters. 6
The trial court likewise held that the applicable prescriptive period is 30 years under Article
1141 of the Civil Code 7 , reckoned from March 15, 1962, when the writ of execution of the
compromise judgment in Civil Case 1177 was issued, and that the original complaint having
been filed in 1986, the action has not yet prescribed. In addition, the trial court regarded
the defense of prescription as having been waived, this not being one of the issues agreed
upon at pre-trial.
Thus, the dispositive portion of the RTCs Decision of December 13, 1990 reads:chanrob1es
virtual 1aw library
WHEREFORE, premises considered, the Deed of Absolute Sale otherwise known as Doc. No.
8; Book No. 14; Page No. 1; Series of 1951 of the Notarial file of Pompeyo B. Calleja which
is considered a donation, is hereby reduced proportionately insofar as it affected the
legitime of the late Victor Imperial, which share is inherited by the plaintiffs herein, to the
extent that plaintiffs are ordered to be given by defendant a portion of 10,940 square
meters thereof.
In order to avoid further conflict, the 10,940 share to be given to plaintiffs should include
the portion which they are presently occupying, by virtue of the extended lease to their
father Ricardo Villalon, where the bungalow in question stands.

The remaining portion to be given to plaintiffs may come from any other portion that may
be agreed upon by the parties, otherwise, this court will appoint a commissioner to
undertake the partition.
The other 21,897 square meters should go to the defendant as part of his legitime and by
virtue of the reduced donation.
No pronouncement as to damages as they were not sufficiently proved.
SO ORDERED. 8
The Court of Appeals affirmed the RTC Decision in toto.
Before us, petitioner questions the following findings of respondent court: (1) that there was
no res judicata, there being no identity of parties and cause of action between the instant
case and Civil Case No. 1177; (2) that private respondents had a right to question the
donation; (3) that private respondents action is barred by prescription, laches and
estoppel; and (4) that the donation was inofficious and should be reduced.
It is an indispensable requirement in res judicata that there be, between the first and
second action, identity of parties, of subject matter and of cause of action. 9 A perusal of
the records leads us to conclude that there is no identity of parties and of cause of action as
between Civil Case No. 1177 and Civil Case No. 7646. Civil Case No. 1177 was instituted by
Leoncio in his capacity as donor of the questioned donation. While it is true that upon his
death, Victor was substituted as plaintiff of the action, such does not alter the fact that
Victors participation in the case was in representation of the interests of the original
plaintiff, Leoncio. The purpose behind the rule on substitution of parties is to ensure that the
deceased party would continue to be properly represented in the suit through the duly
appointed legal representative of the estate 10 , or his heir, as in this case, for which no
court appointment is required. 11 Petitioners argument, therefore, that there is substantial
identity between Leoncio and private respondents, being heirs and successors-in-interest of
Victor, is unavailing.
Moreover, Leoncios cause of action as donor of the property was fraud, purportedly
employed upon him by petitioner in the execution of the donation. While the same
circumstances of fraud and deceit are alleged in private respondents complaint, it also
raises the additional ground of inofficiousness of donation.
Contrary to petitioners contentions, inofficiousness of donation does not, and could not,
form part of Leoncios cause of action in Civil Case No. 1177. Inofficiousness as a cause of
action may arise only upon the death of the donor, as the value of the donation will then be
contrasted with the net value of the estate of the donor-deceased. 12
Consequently, while in Civil Case No. 1177, Leoncio sought the revocation in full of the
donation on ground of fraud, the instant case actually has two alternative causes of action.
First, for fraud and deceit, under the same circumstances as alleged in Leoncios complaint,
which seeks the annulment in full of the donation, and which the trial court correctly
dismissed because the compromise agreement in Civil Case No. 1177 served as a
ratification and waiver on the part of Leoncio of whatever defects in voluntariness and
consent may have been attendant in the making of the donation. The second cause of action
is the alleged inofficiousness of the donation, resulting in the impairment of Victors
legitime, which seeks the annulment, not of the entire donation, but only of that portion
diminishing the legitime. 13 It is on the basis of this second cause of action that private

respondents prevailed in the lower courts.


Petitioner next questions the right of private respondents to contest the donation. Petitioner
sources his argument from Article 772 of the Civil Code, thus:chanrob1es virtual 1aw library
Only those who at the time of the donors death have a right to the legitime and their heirs
and successors in interest may ask for the reduction of inofficious donations. . .
As argued by petitioner, when Leoncio died on January 8, 1962, it was only Victor who was
entitled to question the donation. However, instead of filing an action to contest the
donation, Victor asked to be substituted as plaintiff in Civil Case No. 1177 and even moved
for execution of the compromise judgment therein.chanrobles.com : virtual law library
No renunciation of legitime may be presumed from the foregoing acts. It must be
remembered that at the time of the substitution, the judgment approving the compromise
agreement has already been rendered. Victor merely participated in the execution of the
compromise judgment. He was not a party to the compromise agreement.
More importantly, our law on succession does not countenance tacit repudiation of
inheritance. Rather, it requires an express act on the part of the heir. Thus, under Article
1051 of Civil Code:chanrob1es virtual 1aw library
The repudiation of an inheritance shall be made in a public or authentic instrument, or by
petition presented to the court having jurisdiction over the testamentary or intestate
proceedings.
Thus, when Victor substituted Leoncio in Civil Case No. 1177 upon the latters death, his act
of moving for execution of the compromise judgment cannot be considered an act of
renunciation of his legitime. He was, therefore, not precluded or estopped from
subsequently seeking the reduction of the donation, under Article 772. Nor are Victors
heirs, upon his death, precluded from doing so, as their right to do so is expressly
recognized under Article 772, and also in Article 1053:chanrob1es virtual 1aw library
If the heir should die without having accepted or repudiated the inheritance, his right shall
be transmitted to his heirs.
Be that as it may, we find merit in petitioners other assignment of errors. Having
ascertained this action as one for reduction of an inofficious donation, we cannot sustain the
holding of both the trial court and the Court of Appeals that the applicable prescriptive
period is thirty years, under Article 1141 of the Civil Code. The sense of both courts that this
case is a "real action over an immovable" allots undue credence to private respondents
description of their complaint, as one for "Annulment of Documents, Reconveyance and
Recovery of Possession of Property", which suggests the action to be, in part, a real action
enforced by those with claim of title over the disputed land.
Unfortunately for private respondents, a claim for legitime does not amount to a claim of
title. In the recent case of Vizconde v. Court of Appeals 14 , we declared that what is
brought to collation is not the donated property itself, but the value of the property at the
time it was donated. The rationale for this is that the donation is a real alienation which
conveys ownership upon its acceptance, hence, any increase in value or any deterioration or
loss thereof is for the account of the heir or donee. 15
What, then, is the prescriptive period for an action for reduction of an inofficious donation?

The Civil Code specifies the following instances of reduction or revocation of donations: (1)
four years, in cases of subsequent birth, appearance, recognition or adoption of a child; 16
(2) four years, for non-compliance with conditions of the donation; 17 and (3) at any time
during the lifetime of the donor and his relatives entitled to support, for failure of the donor
to reserve property for his or their support. 18 Interestingly, donations as in the instant
case, 19 the reduction of which hinges upon the allegation of impairment of legitime, are
not controlled by a particular prescriptive period, for which reason we must resort to the
ordinary rules of prescription.
Under Article 1144 of the Civil Code, actions upon an obligation created by law must be
brought within ten years from the time the right of action accrues. Thus, the ten-year
prescriptive period applies to the obligation to reduce inofficious donations, required under
Article 771 of the Civil Code, to the extent that they impair the legitime of compulsory heirs.
From when shall the ten-year period be reckoned? The case of Mateo v. Lagua, 29 SCRA
864, which involved the reduction for inofficiousness of a donation propter nuptias,
recognized that the cause of action to enforce a legitime accrues upon the death of the
donor-decedent. Clearly so, since it is only then that the net estate may be ascertained and
on which basis, the legitimes may be determined.
It took private respondents 24 years since the death of Leoncio to initiate this case. The
action, therefore, has long prescribed.
As for the trial courts holding that the defense of prescription had been waived, it not being
one of the issues agreed upon at pre-trial, suffice it to say that while the terms of the pretrial order bind the parties as to the matters to be taken up in trial, it would be the height of
injustice for us to adhere to this technicality when the fact of prescription is manifest in the
pleadings of the parties, as well as the findings of fact of the lower courts. 20
A perusal of the factual antecedents reveals that not only has prescription set in, private
respondents are also guilty of estoppel by laches. It may be recalled that Leoncio died on
January 8, 1962. Fifteen years later, Victor died, leaving as his sole heir Ricardo Villalon,
who also died four years later. While Victor was alive, he gave no indication of any interest
to contest the donation of his deceased father. As we have discussed earlier, the fact that he
actively participated in Civil Case No. 1177 did not amount to a renunciation of his
inheritance and does not preclude him from bringing an action to claim his legitime. These
are matters that Victor could not possibly be unaware of, considering that he is a lawyer. 21
Ricardo Villalon was even a lessee of a portion of the donated property, and could have
instituted the action as sole heir of his natural son, or at the very least, raised the matter of
legitime by way of counterclaim in an ejectment case 22 filed against him by petitioner in
1979. Neither does it help private respondents cause that five years have elapsed since the
death of Ricardo in 1981 before they filed their complaint with the
RTC.chanroblesvirtualawlibrary
Estoppel by laches is the failure or neglect for an unreasonable or unexplained length of
time to do that which, by exercising due diligence, could or should have been done earlier,
warranting a presumption that the person has abandoned his right or declined to assert it.
23 We find the necessity for the application of the principle of estoppel by laches in this
case, in order to avoid an injustice.
A final word on collation of donations. We observe that after finding the donation to be
inofficious because Leoncio had no other property at the time of his death, the RTC
computed the legitime of Victor based on the area of the donated property. Hence, in its

dispositive portion, it awarded a portion of the property to private respondents as Victors


legitime. This was upheld by the Court of Appeals.
Our rules of succession require that before any conclusion as to the legal share due to a
compulsory heir may be reached, the following steps must be taken: (1) the net estate of
the decedent must be ascertained, by deducting all the payable obligations and charges
from the value of the property owned by the deceased at the time of his death; (2) the
value of all donations subject to collation would be added to it. 24
Thus, it is the value of the property at the time it is donated, and not the property itself,
which is brought to collation. Consequently, even when the donation is found inofficious and
reduced to the extent that it impaired Victors legitime, private respondents will not receive
a corresponding share in the property donated. Thus, in this case where the collatable
property is an immovable, what may be received is: (1) an equivalent, as much as possible,
in property of the same nature, class and quality; 25 (2) if such is impracticable, the
equivalent value of the impaired legitime in cash or marketable securities; 26 or (3) in the
absence of cash or securities in the estate, so much of such other property as may be
necessary, to be sold in public auction. 27
We believe this worth mentioning, even as we grant the petition on grounds of prescription
and laches.
ACCORDINGLY, the decision of the Court of Appeals in C.A. G.R. CV No. 31976, affirming in
toto the decision of the Regional Trial Court in Civil Case No. 7646, is reversed and set
aside. No costs.
SO ORDERED.

111. Republic v. Silim (356 SCRA 1)195 196


G.R. No. 140487. April 2, 2001.]
REPUBLIC OF THE PHILIPPINES, Petitioner, v. LEON SILIM and ILDEFONSA
MANGUBAT, Respondents.
DECISION
KAPUNAN, J.:
Before the Court is a petition for review under Rule 45 seeking the reversal of the Decision
of the Court of Appeals in CA-G.R. No. 43840, entitled Leon Silim, Et. Al. v. Wilfredo Palma,
Et Al., which declared null and void the donation made by respondents of a parcel of land in
favor of the Bureau of Public Schools, Municipality of Malangas, Zamboanga del Sur.
The antecedents of this case are as follows:chanrob1es virtual 1aw library
On 17 December 1971, Respondents, the Spouses Leon Silim and Ildefonsa Mangubat,
donated a 5,600 square meter parcel of land in favor of the Bureau of Public Schools,
Municipality of Malangas, Zamboanga del Sur (BPS). In the Deed of Donation, respondents

imposed the condition that the said property should "be used exclusively and forever for
school purposes only." 1 This donation was accepted by Gregorio Buendia, the District
Supervisor of BPS, through an Affidavit of Acceptance and/or Confirmation of
Donation.chanrob1es virtua1 1aw 1ibrary
Through a fund raising campaign spearheaded by the Parent-Teachers Association of
Barangay Kauswagan, a school building was constructed on the donated land. However, the
Bagong Lipunan school building that was supposed to be allocated for the donated parcel of
land in Barangay Kauswagan could not be released since the government required that it be
built upon a one (1) hectare parcel of land. To remedy this predicament, Assistant School
Division Superintendent of the Province of Zamboanga del Sur, Sabdani Hadjirol, authorized
District Supervisor Buendia to officially transact for the exchange of the one-half (1/2)
hectare old school site of Kauswagan Elementary School to a new and suitable location
which would fit the specifications of the government. Pursuant to this, District Supervisor
Buendia and Teresita Palma entered into a Deed of Exchange whereby the donated lot was
exchanged with the bigger lot owned by the latter. Consequently, the Bagong Lipunan school
buildings were constructed on the new school site and the school building previously erected
on the donated lot was dismantled and transferred to the new location.
When respondent Leon Silim saw, to his surprise, that Vice-Mayor Wilfredo Palma was
constructing a house on the donated land, he asked the latter why he was building a house
on the property he donated to BPS. Vice Mayor Wilfredo Palma replied that he is already the
owner of the said property. Respondent Leon Silim endeavored to stop the construction of
the house on the donated property but Vice-Mayor Wilfredo Palma advised him to just file a
case in court.
On February 10, 1982, respondents filed a Complaint for Revocation and Cancellation of
Conditional Donation, Annulment of Deed of Exchange and Recovery of Possession and
Ownership of Real Property with damages against Vice Mayor Wilfredo Palma, Teresita
Palma, District Supervisor Buendia and the BPS before the Regional Trial Court of Pagadian
City, Branch 21. In its Decision dated 20 August 1993, the trial court dismissed the
complaint for lack of merit. 2 The pertinent portion of the decision reads:chanrob1es virtual
1aw library
Thus, it is the considered view of this Court that there was no breach or violation of the
condition imposed in the subject Deed of Donation by the donee. The exchange is proper
since it is still for the exclusive use for school purposes and for the expansion and
improvement of the school facilities within the community. The Deed of Exchange is but a
continuity of the desired purpose of the donation made by plaintiff Leon Silim.
In sum, it may be safely stated that the aforesaid transaction of exchange is a (sic)
exception to the law invoked by the plaintiffs (Art. 764, Civil Code). The donee, being the
State had the greater reciprocity of interest in the gratuitous and onerous contract of
donation. It would be illogical and selfish for the donor to technically preclude the donee
from expanding its school site and improvement of its school facilities, a paramount
objective of the donee in promoting the general welfare and interests of the people of
Barangay Kauswagan. But it is a well-settled rule that if the contract is onerous, such as the
Deed of Donation in question, the doubt shall be settled in favor of the greatest reciprocity
of interests, which in the instant case, is the donee.
x

WHEREFORE, in view of all the foregoing, judgment is hereby rendered:chanrob1es virtual


1aw library
1. Dismissing the complaint for lack of merit;
2. Dismissing the counterclaim for the sake of harmony and reconciliation between the
parties;
3. With costs against plaintiffs.chanrob1es virtua1 1aw 1ibrary
SO ORDERED. 3
Not satisfied with the decision of the trial court, respondents elevated the case to the Court
of Appeals. In its Decision dated 22 October 1999, the Court of Appeals reversed the
decision of the trial court and declared the donation null and void on the grounds that the
donation was not properly accepted and the condition imposed on the donation was
violated. 4
Hence, the present case where petitioner raises the following issues:chanrob1es virtual 1aw
library
I. WHETHER THE COURT OF APPEALS ERRED IN DECLARING THE DONATION NULL AND
VOID DUE TO AN INVALID ACCEPTANCE BY THE DONEE.
II. WHETHER THE COURT OF APPEALS ERRED IN DECLARING THE DONATION NULL AND
VOID DUE TO AN ALLEGED VIOLATION OF A CONDITION IN THE DONATION. 5
The Court gives DUE COURSE to the petition.
Petitioner contends that the Court of Appeals erred in declaring the donation null and void
for the reason that the acceptance was not allegedly done in accordance with Articles 745 6
and 749 7 of the New Civil Code.
We agree.
Donations, according to its purpose or cause, may be categorized as: (1) pure or simple;
(2) remuneratory or compensatory; (3) conditional or modal; and (4) onerous. A pure or
simple donation is one where the underlying cause is plain gratuity. 8 This is donation in its
truest form. On the other hand, a remuneratory or compensatory donation is one made for
the purpose of rewarding the donee for past services, which services do not amount to a
demandable debt. 9 A conditional or modal donation is one where the donation is made in
consideration of future services or where the donor imposes certain conditions, limitations
or charges upon the donee, the value of which is inferior than that of the donation given. 10
Finally, an onerous donation is that which imposes upon the donee a reciprocal obligation or,
to be more precise, this is the kind of donation made for a valuable consideration, the cost
of which is equal to or more than the thing donated. 11
Of all the foregoing classifications, donations of the onerous type are the most distinct. This
is because, unlike the other forms of donation, the validity of and the rights and obligations
of the parties involved in an onerous donation is completely governed not by the law on
donations but by the law on contracts. In this regard, Article 733 of the New Civil Code
provides:chanrob1es virtual 1aw library

ARTICLE 733. 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.chanrob1es virtua1 1aw 1ibrary
The donation involved in the present controversy is one which is onerous since there is a
burden imposed upon the donee to build a school on the donated property. 12
The Court of Appeals held that there was no valid acceptance of the donation
because:chanrob1es virtual 1aw library
x

Under the law the donation is void if there is no acceptance. The acceptance may either be
in the same document as the deed of donation or in a separate public instrument. If the
acceptance is in a separate instrument, "the donor shall be notified thereof in an authentic
form, and his step shall be noted in both instruments.
"Title to immovable property does not pass from the donor to the donee by virtue of a deed
of donation until and unless it has been accepted in a public instrument and the donor duly
noticed thereof. (Abellera v. Balanag, 37 Phils. 85; Alejandro v. Geraldez, 78 SCRA 245). If
the acceptance does not appear in the same document, it must be made in another. Solemn
words are not necessary; it is sufficient if it shows the intention to accept, But in this case,
it is necessary that formal notice thereof be given to the donor and the fact that due notice
has been given it must be noted in both instruments (that containing the offer to donate
and that showing acceptance). Then and only then is the donation perfected. (11 Manresa
155-11, cited in Vol. II, Civil Code of the Philippines by Tolentino.)."cralaw virtua1aw library
This Court perused carefully the Deed of Donation marked as exhibit "A" and "1" to
determine whether there was acceptance of the donation. This Court found none. We further
examined the record if there is another document which embodies the acceptance, we found
one. Although the Court found that in the offer of exhibits of the defendants, a supposed
affidavit of acceptance and/or confirmation of the donation, marked as exhibit "8" appears
to have been offered.
However, there is nothing in the record that the exhibits offered by the defendants have
been admitted nor such exhibits appear on record.
Assuming that there was such an exhibit, the said supposed acceptance was not noted in
the Deed of Donation as required under Art. 749 of the Civil Code. And according to
Manresa, supra, a noted civilist, the notation is one of the requirements of perfecting a
donation. In other words, without such a notation, the contract is not perfected contract.
Since the donation is not perfected, the contract is therefore not valid. 13
x

We hold that there was a valid acceptance of the donation.


Sections 745 and 749 of the New Civil Code provide:chanrob1es virtual 1aw library
ARTICLE 745. The donee must accept the donation personally, or through an authorized
person with a special power for the purpose, or with a general and sufficient power;

otherwise the donation shall be void.


ARTICLE 749. In order that the donation of an immovable may be laid, it must be made in a
public document, specifying therein the property donated and the value of the charge which
the donee must satisfy.
The acceptance may be made in the same deed of donation or in a separate public
document, but it shall not take effect unless it is done during the lifetime of the donor.
If the acceptance is made in a separate instrument, the donor shall be notified thereof in an
authentic form, and this step shall be noted in both instruments.
Private respondents, as shown above, admit that in the offer of exhibits by the defendants
in the trial court, an affidavit of acceptance and/or confirmation of the donation, marked as
Exhibit "8," was offered in evidence. However, private respondents now question this exhibit
because, according to them "there is nothing in the record that the exhibits offered by the
defendants have been admitted nor such exhibit appear on record."cralaw virtua1aw library
Respondents stance does not persuade. The written acceptance of the donation having
been considered by the trial court in arriving at its decision, there is the presumption that
this exhibit was properly offered and admitted by the court.chanrob1es virtua1 1aw 1ibrary
Moreover, this issue was never raised in the Court of Appeals. Nowhere in their brief did
respondents question the validity of the donation on the basis of the alleged defect in the
acceptance thereof. If there was such a defect, why did it take respondents more than ten
(10) years from the date of the donation to question its validity? In the very least, they are
guilty of estoppel. 14
Respondents further argue that assuming there was a valid acceptance of the donation, the
acceptance was not noted in the Deed of Donation as required in Article 749 of the Civil
Code, hence, the donation is void.
The purpose of the formal requirement for acceptance of a donation is to ensure that such
acceptance is duly communicated to the donor. Thus, in Pajarillo v. Intermediate Appellate
Court, 15 the Court held:chanrob1es virtual 1aw library
There is no question that the donation was accepted in a separate public instrument and
that it was duly communicated to the donors. Even the petitioners cannot deny this. But
what they do contend is that such acceptance was not "noted in both instruments," meaning
the extra-judicial partition itself and the instrument of acceptance, as required by the Civil
Code.
That is perfectly true. There is nothing in either of the two instruments showing that
"authentic notice" of the acceptance was made by Salud to Juana and Felipe. And while the
first instrument contains the statement that "the donee does hereby accept this donation
and does hereby express her gratitude for the kindness and liberality of the donor," the only
signatories thereof were Felipe Balane and Juana Balane de Suterio. That was in fact the
reason for the separate instrument of acceptance signed by Salud a month later.
A strict interpretation of Article 633 can lead to no other conclusion that the annulment of
the donation for being defective in form as urged by the petitioners. This would be in
keeping with the unmistakable language of the above-quoted provision. However, we find
that under the circumstances of the present case, a literal adherence to the requirement of

the law might result not in justice to the parties but conversely a distortion of their
intentions. It is also a policy of the Court to avoid such as interpretation.
The purpose of the formal requirement is to insure that the acceptance of the donation is
duly communicated to the donor. In the case at bar, it is not even suggested that Juana was
unaware of the acceptance for she in fact confirmed it later and requested that the donated
land be not registered during her lifetime by Salud. Given this significant evidence, the
Court cannot in conscience declare the donation ineffective because there is no notation in
the extra-judicial settlement of the donees acceptance. That would be placing too much
stress on mere form over substance. It would also disregard the clear reality of the
acceptance of the donation as manifested in the separate instrument dated June 20, 1946,
and as later acknowledged by Juan.
In the case at bar, a school building was immediately constructed after the donation was
executed. Respondents had knowledge of the existence of the school building put up on the
donated lot through the efforts of the Parents-Teachers Association of Barangay Kauswagan.
It was when the school building was being dismantled and transferred to the new site and
when Vice-Mayor Wilfredo Palma was constructing a house on the donated property that
respondents came to know of the Deed of Exchange. The actual knowledge by respondents
of the construction and existence of the school building fulfilled the legal requirement that
the acceptance of the donation by the donee be communicated to the donor.
On respondents claim, which was upheld by the Court of Appeals, that the acceptance by
BPS District Supervisor Gregorio Buendia of the donation was ineffective because of the
absence of a special power of attorney from the Republic of the Philippines, it is undisputed
that the donation was made in favor of the Bureau of Public Schools. Such being the case,
his acceptance was authorized under Section 47 of the 1987 Administrative Code which
states:chanrob1es virtual 1aw library
SECTION 47. Contracts and Conveyances. Contracts or conveyances may be executed for
and in behalf of the Government or of any of its branches, subdivisions, agencies, or
instrumentalities, whenever demanded by the exigency or exigencies of the service and as
long as the same are not prohibited by law.
Finally, it is respondents submission that the donee, in exchanging the donated lot with a
bigger lot, violated the condition in the donation that the lot be exclusively used for school
purposes only.
What does the phrase "exclusively used for school purposes" convey? "School" is simply an
institution or place of education. 16 "Purpose" is defined as "that which one sets before him
to accomplish or attain; an end, intention, or aim, object, plan, project. Term is synonymous
with the ends sought, an object to be attained, an intention, etc." 17 "Exclusive" means
"excluding or having power to exclude (as by preventing entrance or debarring from
possession, participation, or use); limiting or limited to possession, control or use. 18
Without the slightest doubt, the condition for the donation was not in any way violated when
the lot donated was exchanged with another one. The purpose for the donation remains the
same, which is for the establishment of a school. The exclusivity of the purpose was not
altered or affected. In fact, the exchange of the lot for a much bigger one was in
furtherance and enhancement of the purpose of the donation. The acquisition of the bigger
lot paved the way for the release of funds for the construction of Bagong Lipunan school
building which could not be accommodated by the limited area of the donated
lot.chanrob1es virtua1 1aw 1ibrary

WHEREFORE, the decision of the Court of Appeals is hereby REVERSED and SET ASIDE and
the decision of the Regional Trial Court is REINSTATED.
SO ORDERED.
112. Gestopa v. Court of Appeals (342 SCRA 105)197 198
G.R. No. 111904. October 5, 2000
SPS. AGRIPINO GESTOPA and ISABEL SILARIO GESTOPA, Petitioners, v. COURT OF
APPEALS and MERCEDES DANLAG y PILAPIL, Respondents.
DECISION
QUISUMBING, J.:
This petition for review,1 under Rule 45 of the Rules of Court, assails the decision2of the
Court of Appeals dated August 31, 1993, in CA-G.R. CV No. 38266, which reversed the
judgment3 of the Regional Trial Court of Cebu City, Branch 5.
The facts, as culled from the records, are as follows:
Spouses Diego and Catalina Danlag were the owners of six parcels of unregistered lands.
They executed three deeds of donation mortis causa, two of which are dated March 4, 1965
and another dated October 13, 1966, in favor of private respondent Mercedes DanlagPilapil.4 The first deed pertained to parcels 1 & 2 with Tax Declaration Nos. 11345 and
11347, respectively. The second deed pertained to parcel 3, with TD No. 018613. The last
deed pertained to parcel 4 with TD No. 016821. All deeds contained the reservation of the
rights of the donors (1) to amend, cancel or revoke the donation during their lifetime, and
(2) to sell, mortgage, or encumber the properties donated during the donors' lifetime, if
deemed necessary.
On January 16, 1973, Diego Danlag, with the consent of his wife, Catalina Danlag, executed
a deed of donation inter vivos5 covering the aforementioned parcels of land plus two other
parcels with TD Nos. 11351 and 11343, respectively, again in favor of private respondent
Mercedes. This contained two conditions, that (1) the Danlag spouses shall continue to
enjoy the fruits of the land during their lifetime, and that (2) the donee can not sell or
dispose of the land during the lifetime of the said spouses, without their prior consent and
approval. Mercedes caused the transfer of the parcels' tax declaration to her name and paid
the taxes on them.
On June 28, 1979 and August 21, 1979, Diego and Catalina Danlag sold parcels 3 and 4 to
herein petitioners, Mr. and Mrs. Agripino Gestopa. On September 29, 1979, the Danlags
executed a deed of revocation6recovering the six parcels of land subject of the aforecited
deed of donation inter vivos.
On March 1, 1983, Mercedes Pilapil (herein private respondent) filed with the RTC a petition
against the Gestopas and the Danlags, for quieting of title7 over the above parcels of land.
She alleged that she was an illegitimate daughter of Diego Danlag; that she lived and
rendered incalculable beneficial services to Diego and his mother, Maura Danlag, when the

latter was still alive. In recognition of the services she rendered, Diego executed a Deed of
Donation on March 20, 1973, conveying to her the six (6) parcels of land. She accepted the
donation in the same instrument, openly and publicly exercised rights of ownership over the
donated properties, and caused the transfer of the tax declarations to her name. Through
machination, intimidation and undue influence, Diego persuaded the husband of Mercedes,
Eulalio Pilapil, to buy two of the six parcels covered by the deed of donation. Said
donation inter vivos was coupled with conditions and, according to Mercedes, since its
perfection, she had complied with all of them; that she had not been guilty of any act of
ingratitude; and that respondent Diego had no legal basis in revoking the subject donation
and then in selling the two parcels of land to the Gestopas.
In their opposition, the Gestopas and the Danlags averred that the deed of donation dated
January 16, 1973was null and void because it was obtained by Mercedes through
machinations and undue influence. Even assuming it was validly executed, the intention was
for the donation to take effect upon the death of the donor. Further, the donation was void
for it left the donor, Diego Danlag, without any property at all.
On December 27, 1991, the trial court rendered its decision, thus:
"WHEREFORE, the foregoing considered, the Court hereby renders judgment in favor of the
defendants and against the plaintiff:
1. Declaring the Donations Mortis Causa and Inter Vivos as revoked, and, therefore, has
(sic) no legal effect and force of law.
2. Declaring Diego Danlag the absolute and exclusive owner of the six (6) parcels of land
mentioned in the Deed of revocation (Exh. P-plaintiff, Exh. 6-defendant Diego Danlag).
3. Declaring the Deeds of Sale executed by Diego Danlag in favor of spouses Agripino
Gestopa and Isabel Gestopa dated June 28, 1979 (Exh. S-plaintiff; Exh. 18-defendant);
Deed of Sale dated December 18, 1979 (Exh. T plaintiff; Exh. 9-defendant); Deed of Sale
dated September 14, 1979 (Exh. 8); Deed of Sale dated June 30, 1975 (Exh. U); Deed of
Sale dated March 13, 1978 (Exh. X) as valid and enforceable duly executed in accordance
with the formalities required by law.
4. Ordering all tax declaration issued in the name of Mercedes Danlag Y Pilapil covering the
parcel of land donated cancelled and further restoring all the tax declarations previously
cancelled, except parcels nos. 1 and 5 described, in the Deed of Donation Inter Vivos (Exh.
"1") and Deed of Sale (Exh. "2") executed by defendant in favor of plaintiff and her
husband.
[5.] With respect to the contract of sale of abovestated parcels of land, vendor Diego Danlag
and spouse or their estate have the alternative remedies of demanding the balance of the
agreed price with legal interest, or rescission of the contract of sale.
SO ORDERED."8crlwvirtualibrry
In rendering the above decision, the trial court found that the reservation clause in all the
deeds of donation indicated that Diego Danlag did not make any donation; that the
purchase by Mercedes of the two parcels of land covered by the Deed of Donation Inter
Vivos bolstered this conclusion; that Mercedes failed to rebut the allegations of ingratitude

she committed against Diego Danlag; and that Mercedes committed fraud and machination
in preparing all the deeds of donation without explaining to Diego Danlag their contents.
Mercedes appealed to the Court of Appeals and argued that the trial court erred in (1)
declaring the donation dated January 16, 1973 as mortis causa and that the same was
already revoked on the ground of ingratitude; (2) finding that Mercedes purchased from
Diego Danlag the two parcels of land already covered by the above donation and that she
was only able to pay three thousand pesos, out of the total amount of twenty thousand
pesos; (3) failing to declare that Mercedes was an acknowledged natural child of Diego
Danlag.
On August 31, 1993, the appellate court reversed the trial court. It ruled:
"PREMISES CONSIDERED, the decision appealed from is REVERSED and a new judgment is
hereby rendered as follows:
1. Declaring the deed of donation inter vivos dated January 16, 1973 as not having been
revoked and consequently the same remains in full force and effect;
2. Declaring the Revocation of Donation dated June 4, 1979 to be null and void and
therefore of no force and effect;
3. Declaring Mercedes Danlag Pilapil as the absolute and exclusive owner of the six (6)
parcels of land specified in the above-cited deed of donation inter vivos;
4. Declaring the Deed of Sale executed by Diego Danlag in favor of spouses Agripino and
Isabel Gestopa dated June 28, 1979 (Exhibits S and 18), Deed of Sale dated December 18,
1979 (Exhibits T and 19), Deed of Sale dated September 14, 1979 (Exhibit 8), Deed of Sale
dated June 30, 1975 (Exhibit U), Deed of Sale dated March 13, 1978 (Exhibit X) as well as
the Deed of Sale in favor of Eulalio Danlag dated December 27, 1978 (Exhibit 2) not to have
been validly executed;
5. Declaring the above-mentioned deeds of sale to be null and void and therefore of no force
and effect;
6. Ordering spouses Agripino Gestopa and Isabel Silerio Gestopa to reconvey within thirty
(30) days from the finality of the instant judgment to Mercedes Danlag Pilapil the parcels of
land above-specified, regarding which titles have been subsequently fraudulently secured,
namely those covered by O.C.T. T-17836 and O.C.T. No. 17523.
7. Failing to do so, ordering the Branch Clerk of Court of the Regional Trial Court (Branch V)
at Cebu City to effect such reconveyance of the parcels of land covered by O.C.T. T-17836
and 17523.
SO ORDERED."9crlwvirtualibrry
The Court of Appeals held that the reservation by the donor of lifetime usufruct indicated
that he transferred to Mercedes the ownership over the donated properties; that the right to
sell belonged to the donee, and the donor's right referred to that of merely giving consent;
that the donor changed his intention by donating inter vivos properties already
donated mortis causa; that the transfer to Mercedes' name of the tax declarations

pertaining to the donated properties implied that the donation was inter vivos; and that
Mercedes did not purchase two of the six parcels of land donated to her.
Hence, this instant petition for review filed by the Gestopa spouses, asserting that:
"THE HONORABLE COURT OF APPEALS, TWELFTH DIVISION, HAS GRAVELY ERRED IN
REVERSING THE DECISION OF THE COURT A QUO."10crlwvirtualibrry
Before us, petitioners allege that the appellate court overlooked the fact that the donor did
not only reserve the right to enjoy the fruits of the properties, but also prohibited the donee
from selling or disposing the land without the consent and approval of the Danlag spouses.
This implied that the donor still had control and ownership over the donated properties.
Hence, the donation was post mortem.
Crucial in resolving whether the donation was inter vivos or mortis causa is the
determination of whether the donor intended to transfer the ownership over the properties
upon the execution of the deed.11crlwvirtualibrry
In ascertaining the intention of the donor, all of the deed's provisions must be read
together.12 The deed of donation dated January 16, 1973, in favor of Mercedes contained
the following:
"That for and in consideration of the love and affection which the Donor inspires in the
Donee and as an act of liberality and generosity, the Donor hereby gives, donates, transfer
and conveys by way of donation unto the herein Donee, her heirs, assigns and successors,
the above-described parcels of land;
That it is the condition of this donation that the Donor shall continue to enjoy all the fruits of
the land during his lifetime and that of his spouse and that the donee cannot sell or
otherwise, dispose of the lands without the prior consent and approval by the Donor and her
spouse during their lifetime.
xxx
That for the same purpose as hereinbefore stated, the Donor further states that he has
reserved for himself sufficient properties in full ownership or in usufruct enough for his
maintenance of a decent livelihood in consonance with his standing in society.
That the Donee hereby accepts the donation and expresses her thanks and gratitude for the
kindness and generosity of the Donor."13
Note first that the granting clause shows that Diego donated the properties out of love and
affection for the donee. This is a mark of a donation inter vivos.14 Second, the reservation of
lifetime usufruct indicates that the donor intended to transfer the naked ownership over the
properties. As correctly posed by the Court of Appeals, what was the need for such
reservation if the donor and his spouse remained the owners of the properties? Third, the
donor reserved sufficient properties for his maintenance in accordance with his standing in
society, indicating that the donor intended to part with the six parcels of land. 15 Lastly, the
donee accepted the donation. In the case of Alejandro vs. Geraldez, 78 SCRA 245 (1977),
we said that an acceptance clause is a mark that the donation is inter vivos. Acceptance is a

requirement for donations inter vivos. Donations mortis causa, being in the form of a will,
are not required to be accepted by the donees during the donors' lifetime.
Consequently, the Court of Appeals did not err in concluding that the right to dispose of the
properties belonged to the donee. The donor's right to give consent was merely intended to
protect his usufructuary interests. In Alejandro, we ruled that a limitation on the right to sell
during the donors' lifetime implied that ownership had passed to the donees and donation
was already effective during the donors' lifetime.
The attending circumstances in the execution of the subject donation also demonstrated the
real intent of the donor to transfer the ownership over the subject properties upon its
execution.16 Prior to the execution of donation inter vivos, the Danlag spouses already
executed three donations mortis causa. As correctly observed by the Court of Appeals, the
Danlag spouses were aware of the difference between the two donations. If they did not
intend to donate inter vivos, they would not again donate the four lots already
donated mortis causa. Petitioners' counter argument that this proposition was erroneous
because six years after, the spouses changed their intention with the deed of revocation, is
not only disingenious but also fallacious. Petitioners cannot use the deed of revocation to
show the spouses' intent because its validity is one of the issues in this case.
Petitioners aver that Mercedes' tax declarations in her name can not be a basis in
determining the donor's intent. They claim that it is easy to get tax declarations from the
government offices such that tax declarations are not considered proofs of ownership.
However, unless proven otherwise, there is a presumption of regularity in the performance
of official duties.17 We find that petitioners did not overcome this presumption of regularity
in the issuance of the tax declarations. We also note that the Court of Appeals did not refer
to the tax declarations as proofs of ownership but only as evidence of the intent by the
donor to transfer ownership.
Petitioners assert that since private respondent purchased two of the six parcels of land
from the donor, she herself did not believe the donation was inter vivos. As aptly noted by
the Court of Appeals, however, it was private respondent's husband who purchased the two
parcels of land.
As a rule, a finding of fact by the appellate court, especially when it is supported by
evidence on record, is binding on us.18 On the alleged purchase by her husband of two
parcels, it is reasonable to infer that the purchase was without private respondent's consent.
Purchase by her husband would make the properties conjugal to her own disadvantage.
That the purchase is against her self-interest, weighs strongly in her favor and gives
credence to her claim that her husband was manipulated and unduly influenced to make the
purchase, in the first place.
Was the revocation valid? A valid donation, once accepted, becomes irrevocable, except on
account of officiousness, failure by the donee to comply with the charges imposed in the
donation, or ingratitude.19 The donor-spouses did not invoke any of these reasons in the
deed of revocation. The deed merely stated:
"WHEREAS, while the said donation was a donation Inter Vivos, our intention thereof is that
of Mortis Causa so as we could be sure that in case of our death, the above-described
properties will be inherited and/or succeeded by Mercedes Danlag de Pilapil; and that said
intention is clearly shown in paragraph 3 of said donation to the effect that the Doneecannot

dispose and/or sell the properties donated during our life-time, and that we are the one
enjoying all the fruits thereof."20crlwvirtualibrry
Petitioners cited Mercedes' vehemence in prohibiting the donor to gather coconut trees and
her filing of instant petition for quieting of title. There is nothing on record, however,
showing that private respondent prohibited the donors from gathering coconuts. Even
assuming that Mercedes prevented the donor from gathering coconuts, this could hardly be
considered an act covered by Article 765 of the Civil Code.21 Nor does this Article cover
respondent's filing of the petition for quieting of title, where she merely asserted what she
believed was her right under the law.
Finally, the records do not show that the donor-spouses instituted any action to revoke the
donation in accordance with Article 769 of the Civil Code.22 Consequently, the supposed
revocation on September 29, 1979, had no legal effect.
WHEREFORE, the instant petition for review is DENIED. The assailed decision of the Court
of Appeals dated August 31, 1993, is AFFIRMED.
Costs against petitioners.
SO ORDERED.
ADDITIONAL CASE: SUMIPAT vs. BANGA
G. R. No. 155810 - August 13, 2004
LYDIA SUMIPAT, LAURITO SUMIPAT, ALEJANDRO SUMIPAT, ALICIA SUMIPAT, and
LIRAFE SUMIPAT,Petitioners, vs. BRIGIDO BANGA, HERMINIGILDO TABOTABO,
VIVIANO TABOTABO, BERNARDITA ANION, and LEONIDA
TABOTABO, Respondents.

DECISION

TINGA, J.:
This is a Petition for Review on Certiorari1 of the Decision2 of the Court of Appeals which
reversed and set aside the decision3 of the Regional Trial Court (RTC) and partially annulled
the Deed of Absolute Transfer and/or Quitclaim (the deed) subject of this case.
We quote the appellate courts findings of fact:
The spouses Placida Tabo-tabo and Lauro Sumipat, who contracted marriage on July 20,
1939, acquired three parcels of land two of which were covered by Original Certificate of
Title No. P-17842 and Transfer Certificate of Title No. T-15826.

The couple was childless.


Lauro Sumipat, however, sired five illegitimate children out of an extra-marital affair with
Pedra Dacola, namely: herein defendants-appellees Lydia, Laurito, Alicia, Alejandro and
Lirafe, all surnamed Sumipat.
On January 5, 1983, Lauro Sumipat executed a document denominated "DEED OF
ABSOLUTE TRANSFER AND/OR QUIT-CLAIM OVER REAL PROPERTIES" (the assailed
document) in favor of defendants-appellees covering the three parcels of land (the
properties). On the document appears the signature of his wife Placida which indicates that
she gave her marital consent thereto.
It appears that on January 5, 1983 when the assailed document was executed, Lauro
Sumipat was already very sick and bedridden; that upon defendant-appellee Lydias request,
their neighbor Benjamin Rivera lifted the body of Lauro Sumipat whereupon Lydia guided his
(Lauro Sumipats) hand in affixing his signature on the assailed document which she had
brought; that Lydia thereafter left but later returned on the same day and requested Lauros
unlettered wife Placida to sign on the assailed document, as she did in haste, even without
the latter getting a responsive answer to her query on what it was all about.
After Lauro Sumipats death on January 30, 1984, his wife Placida, hereinafter referred to as
plaintiff-appellant, and defendants-appellees jointly administered the properties 50% of the
produce of which went to plaintiff-appellant.
As plaintiff-appellants share in the produce of the properties dwindled until she no longer
received any and learning that the titles to the properties in question were already
transferred/made in favor of the defendants-appellees, she filed a complaint for declaration
of nullity of titles, contracts, partition, recovery of ownership now the subject of the present
appeal.
Defendant-appellee Lydia disclaims participation in the execution of the assailed document,
she claiming to have acquired knowledge of its existence only on January 10, 1983 or five
days after its execution when Lauro Sumipat gave the same to her.
Branch 6 of the Regional Trial Court of Dipolog City decided the case in favor of defendantsappellees, it holding that by virtue of the assailed document the due execution of which was
not contested by plaintiff-appellant, the properties were absolutely transferred to
defendants-appellees.4
The trial court found that the subject properties are conjugal having been acquired during
the marriage of Lauro Sumipat and Placida Tabotabo (Placida). However, because Placida
failed to question the genuineness and due execution of the deed and even admitted having
affixed her signature thereon, the trial court declared that the entirety of the subject
properties, and not just Lauro Sumipats conjugal share, were validly transferred to the
defendants, the petitioners herein.5
On appeal,6 the appellate court held that since Placida was unlettered,7 the appellees, the
petitioners herein, as the parties interested in enforcing the deed, have the burden of
proving that the terms thereof were fully explained to her.8 This they failed to do.

Under the Civil Code, a contract where consent is given through mistake, violence,
intimidation, undue influence or fraud is voidable.9 In order that mistake may invalidate
consent, it should refer to the substance of the thing which is the object of the contract, or
to those conditions which have principally moved one or both parties to enter into the
contract.10
The appellate court found that Placida did not understand the full import of the deed
because the terms thereof were not explained to her either by the petitioners or by the
notary public before whom the deed was acknowledged. According to the appellate court,
Judge Pacifico Garcia (Judge Garcia), before whom the deed was acknowledged, did not
identify Placida as having appeared before him on January 5, 1983 to acknowledge the
deed. The jurat indicates that it was only Lauro Sumipat who appeared before Judge Garcia
and to whom he explained the contents of the deed. Further, the appellate court noted that
Judge Garcia himself was under the impression that the deed conveyed the exclusive
properties of Lauro Sumipat. Hence, he could not have explained to Placida that the deed
actually transferred the conjugal properties of Lauro Sumipat and Placida.11
The Court of Appeals, therefore, annulled the deed insofar as it covers Placidas conjugal
share in the subject properties because the latters consent thereto was vitiated by mistake
when she affixed her signature on the document.
The petitioners filed a Motion for Reconsideration on the grounds of estoppel, absence of
fraud and prescription. The appellate court denied the Motion for Reconsideration in
its Resolution12 dated October 16, 2002 ruling that the grounds relied upon have been
addressed in its Decision dated April 11, 2002. Anent the ground of prescription, the
appellate court held that since the properties were acquired through fraud or mistake, the
petitioners are considered trustees of an implied trust for the benefit of Placida. Citing
jurisprudence,13 the Court of Appeals ruled that actions based on implied or constructive
trust prescribe 10 years from the issuance of a Torrens Title over the property. Since two (2)
of the subject properties were issued Transfer Certificates of Title (TCT) Numbered T4003714 and T-4003815 under the petitioners names on August 18, 1987, the Complaint for
declaration of nullity of titles, partition, recovery of ownership and possession,
reconveyance, accounting and damages, which was filed on March 3, 1993, was filed well
within the prescriptive period.
The petitioners are now before this Court principally claiming that Placida freely consented
to the execution of the deed and that they did not commit fraudulent acts in connection with
its execution. They also reiterate their argument that the Court of Appeals should have
dismissed the case on the ground of prescription. It is their contention that the present
action being one to annul a contract on the ground of fraud, it should have been filed within
four (4) years from the discovery of fraud or registration of the instrument with the Registry
of Deeds.
The respondents filed their Comment16 dated February 7, 2003, essentially echoing the
findings of the Court of Appeals on the matter of Placidas consent. According to them,
Placida was deceived and misled into affixing her signature on the deed. They further claim
that Placida did not actually appear before the notary public to acknowledge the instrument.
In their Reply17 dated April 29, 2003, the petitioners insist that Placida was not illiterate and
that Lauro Sumipat validly transferred the titles over the properties in question to them.
They also argue that if Placida did not understand the import of the deed, she could have

questioned Lauro Sumipat about it since the deed was executed a year before the latter
died.
The trial court and the Court of Appeals are in agreement that the subject properties are
conjugal, having been acquired during the marriage of Lauro Sumipat and Placida. They
came out, however, with disparate denouements. While the trial court upheld the validity of
the deed as an instrument of transfer of all the litigated parcels of land in their entirety on
the ground that Placida failed to question its authenticity and due execution, the appellate
court struck the deed down insofar as the conjugal share of Placida is concerned based on
its finding that her consent was vitiated by mistake.
At bottom, the crux of the controversy is whether the questioned deed by its terms or under
the surrounding circumstances has validly transferred title to the disputed properties to the
petitioners.
A perusal of the deed reveals that it is actually a gratuitous disposition of property a
donation although Lauro Sumipat imposed upon the petitioners the condition that he and his
wife, Placida, shall be entitled to one-half (1/2) of all the fruits or produce of the parcels of
land for their subsistence and support. The preliminary clauses of the deed read:
That conscious of my advanced age and failing health, I feel that I am not capable anymore
of attending to and maintaining and keeping in continuous cultivation my above described
properties;
That my children are all desirous of taking over the task of maintaining my properties and
have demonstrated since childhood the needed industry and hard work as they have in fact
established possession over my real properties and introduced more improvements over my
lands, the fruit of which through their concerted efforts and labors, I myself and my family
have enjoyed;
That it would be to the best interest of my above mentioned children that the ownership
over my above described properties be transferred in their names, thereby encouraging
them more in developing the lands to its fullest productivity.18
The deed covers three (3) parcels of land.19 Being a donation of immovable property, the
requirements for validity set forth in Article 749 of the Civil Code should have been
followed, viz:
Art. 749. In order that the donation of the immovable may be valid, it must be made in a
public document, specifying therein the property donated and the value of the charges
which the donee must satisfy.
The acceptance may be made in the same deed of donation or in a separate public
document, but it shall not take effect unless it is done during the lifetime of the donor.
If the acceptance is made in a separate instrument, the donor shall be notified thereof in an
authentic form, and this step shall be noted in both instruments.
Title to immovable property does not pass from the donor to the donee by virtue of a deed
of donation until and unless it has been accepted in a public instrument and the donor duly
notified thereof. The acceptance may be made in the very same instrument of donation. If

the acceptance does not appear in the same document, it must be made in another. Where
the deed of donation fails to show the acceptance, or where the formal notice of the
acceptance, made in a separate instrument, is either not given to the donor or else not
noted in the deed of donation and in the separate acceptance, the donation is null and
void.20
In this case, the donees acceptance of the donation is not manifested either in the deed
itself or in a separate document. Hence, the deed as an instrument of donation is patently
void.
We also note the absence of any proof of filing of the necessary return, payment of donors
taxes on the transfer, or exemption from payment thereof. Under the National Internal
Revenue Code of 1977, the tax code in force at the time of the execution of the deed, an
individual who makes any transfer by gift shall make a return and file the same within 30
days after the date the gift is made with the Revenue District Officer, Collection Agent or
duly authorized Treasurer of the municipality in which the donor was domiciled at the time
of the transfer.21 The filing of the return and payment of donors taxes are mandatory. In
fact, the registrar of deeds is mandated not to register in the registry of property any
document transferring real property by way of gifts inter vivos unless a certification that the
taxes fixed and actually due on the transfer had been paid or that the transaction is tax
exempt from the Commissioner of Internal Revenue, in either case, is presented. 22
Neither can we give effect to the deed as a sale, barter or any other onerous conveyance, in
the absence of valid cause or consideration and consent competently and validly
given.23 While it is true that the appellate court found Placidas consent to have been vitiated
by mistake, her testimony on the matter actually makes out a case of total absence of
consent, not merely vitiation thereof. She testified in this regard, thus:
Q- What have you been doing on that day on January 5, 1983?
A- I was at home boiling water.
Q- While you were boiling water in the house, at that time who arrived, if there was any?
A- Lydia Sumipat arrived.
Court:-(To the witness)
Q- Who is this Lydia Sumipat?
A- The daughter of my husband with his paramour.
Q- How old was she?
A- I did not know if she was already 30 years old at that time because he was born in 1950.
Atty. Legorio:-(To the witness)
Q- When you said Lydia Sumipat, you are referring to one of the defendants in this case?
A- Yes, sir. She is the one.

Q- This Lydia Sumipat you are referring to as one of the principal defendant and daughter of
your husband with his paramour, in January, 1983 what was her educational attainment, if
you know?
A- She has already finished schooling.
Q- Do you know what she obtained?
A- Teacher.
Q- You said she arrived in the afternoon of January 5, 1983 in your house while you were
boiling water. What did she do when she arrived there?
A- She brought with her a paper.
Q- What did she say to you?
A- She told me to sign that paper immediately because there is the witness waiting and so I
asked from her what was that paper I am going to sign. I asked her because I am
unlettered but she said never mind just sign this immediately.
Q- By the way, what is your highest educational attainment?
A- I have never gone to school.
Q- Do you know how to read or to write?
A- I know how to write only my name.
Q- You know how to write your name only?
A- Yes, sir.
Q- You said she told you to sign that piece of paper and you asked her what was that and
she told you "you just sign that", what did you do then?
A- She was in a hurry to let me sign that document so I signed it without knowing what was
that.
Q- Did she tell you that piece of paper was a document wherein the land including your land
in Siayan were to be given to them?
A- I did not give my land.24
During cross-examination, Placida again denied any knowledge of the nature of the deed:
q You are aware that the titles over these lots had already been transferred in the name of
the defendants?
a They surreptitiously transferred the title in their names, I do not know about it.

q You mean to say you signed a document transferring them in their names?
a There was a piece of paper brought to me to be signed by Lydia; I asked whats all about
but she did not tell me; I was forced to sign considering that according to her somebody
was waiting for it.
q What do you mean that you are force to sign?
a She told me to sign that paper immediately because there is a witness waiting that paper
but she was alone when she came to me.
q So you signed that paper?
a I signed it because she was in a hurry.
q That was done during the lifetime of your husband?
a Yes, sir.
q And your husband also signed that paper?
a I do not know because I have not seen my husband signed, Lydia only came to me to let
me sign that paper.
q Is it not a fact that you and your husband were brought before the office of Judge Pacifico
Garcia of Manukan, and in the office you signed that document?
a I have not gone to the Municipal building of Manukan and I do not know Judge Garcia.
q But what you know now that the titles are transferred in the name of the defendants?
a It was Lydia who caused the transfer of the titles in their names.
q And you know that fact when you signed that paper?
a At the time I signed the paper, I do not know yet that the title would be transferred, it was
only at the time when I requested my niece to follow it up because according to them I am
no longer entitled to the land.25
In Baranda v. Baranda,26 this Court declared that the deeds of sale questioned therein are
not merely voidable (as intimated by the plaintiffs themselves in their complaint for
annulment of the deeds and reconveyance of the lots) but null and void ab initio as the
supposed seller declared under oath that she signed the deeds without knowing what they
were. The significant circumstance meant, the Court added, that her consent was not
merely marred by vices of consent so as to make the contracts voidable, but that she had
not given her consent at all.
Parenthetically, as Placidas Complaint is entitled Declaration of Nullity of Titles; Contracts;
Partition, Recovery of Ownership and Possession; Reconveyance; Accounting and Damages
with Prayer for Preliminary Injunction and Receivership, the validity of the deed was directly

assailed, but its absolute nullity was not specifically raised as an issue. Nevertheless, both
the RTC and the appellate court took the cue from Placidas theory that the deed is merely
voidable as regards her conjugal share of the properties. However, since the real issue is
whether the questioned deed has validly transferred ownership of the litigated properties, it
is appropriate for the Court to inquire into the form of the deed and the existence of valid
consent thereto to ascertain the validity or nullity of the deed.
From the substantive and procedural standpoints, the objectives to write finis to a
protracted litigation and avoid multiplicity of suits are worth pursuing at all times.
Conformably, we have ruled in a number of cases that an appellate court is accorded broad
discretionary power to consider even errors not assigned. We have applied this tenet,
albeit as a matter of exception, in the following instances: (1) grounds not assigned as
errors but affecting jurisdiction over the subject matter; (2) matters not assigned as errors
on appeal but are evidently plain or clerical errors within contemplation of law; (3) matters
not assigned as errors on appeal but consideration of which is necessary in arriving at a just
decision and complete resolution of the case or to serve the interests of justice or to avoid
dispensing piecemeal justice; (4) matters not specifically assigned as errors on appeal but
raised in the trial court and are matters of record having some bearing on the issue
submitted which the parties failed to raise or which the lower court ignored; (5) matters not
assigned as errors on appeal but closely related to an error assigned; and (6) matters not
assigned as errors on appeal but upon which the determination of a question properly
assigned is dependent.27
In the instant case, the validity of the deed was directly assailed although both parties are
of the view that it is not an absolute nullity. The correct characterization of the deed is,
therefore, determinative of the present controversy. Elsewise framed, the issue of validity or
nullity is interwoven with the positions adopted by the parties and the rulings made by the
courts below. Hence, we shall be resolute in striking down the deed especially as it appears
on its face to be a patent nullity.
Having said this, we shall now proceed to the issue of prescription. Being an absolute nullity,
both as a donation and as a sale, the deed is subject to attack at any time, in accordance
with the rule in Article 1410 of the Civil Code that an action to declare the inexistence of a
void contract does not prescribe.
We are thus unimpressed by the petitioners contention that the appellate court should have
dismissed Placidas appeal on the ground of prescription. Passage of time cannot cure the
fatal flaw in an inexistent and void contract.28 The defect of inexistence of a contract is
permanent and incurable; hence, it cannot be cured either by ratification or by
prescription. 29
Turning now to the effects of the absolute nullity of the deed, it is well-settled that when
there is a showing of illegality, the property registered is deemed to be simply held in trust
for the real owner by the person in whose name it is registered, and the former then has
the right to sue for the reconveyance of the property. The action for the purpose is also
imprescriptible. As long as the land wrongfully registered under the Torrens system is still in
the name of the person who caused such registration, an action in personam will lie to
compel him to reconvey the property to the real owner.30
One final note. After this Decision shall have become final and executory, the parties may
either extrajudicially divide the estates of Lauro Sumipat and Placida Tabotabo pursuant to

Rule 74 of the Rules of Court or judicially settle the estates pursuant to Rules 78, et seq., in
accordance with this Decision and the law.
WHEREFORE, the instant Petition for Review on Certiorari is DENIED. The Decision of the
Regional Trial Court dated September 29, 1997 and the Decision of the Court of Appeals
dated April 11, 2002, as well as its Resolution dated October 16, 2002, are VACATED. In lieu
thereof, judgment is hereby rendered in favor of the respondents, to wit: (i) DECLARING
the Deed of Absolute Transfer and/or Quitclaim dated January 5, 1983 NULL AND VOID; and
(ii) ORDERING the CANCELLATION of Transfer Certificates of Title Numbered T-40037 and T40038 (Zamboanga del Norte) and the tax declaration covering the unregistered parcel of
land, all issued in the names of the petitioners Lydia, Laurito, Alicia, Alejandro and Lirafe, all
surnamed Sumipat, and the REINSTATEMENT of Original Certificate of Title No. P-17842
(Zamboanga del Norte) Transfer Certificate Title No. T-15826 (Zamboanga del Norte) and
the tax declaration covering the unregistered parcel of land, all in the name of "Lauro
Sumipat . . . married to Placida Tabotabo."
Costs against the petitioners.
SO ORDERED.