Modes of Acquiring Ownership and Donation

I
Carmelo & Bauermann, Inc. (Carmelo) used to own a parcel of land, together with two 2-storey buildings
constructed thereon. It entered into a Contract of Lease with Mayfair Theater Inc. (Mayfair-respondent)
for a period of 20 years. The lease contained a provision granting Mayfair a right of first refusal to
purchase the subject properties. Within the 20-year-lease term -- the subject properties were sold by
Carmelo to Equatorial Realty Development, Inc. (Equatorial-petitioner) for the total sum of P11,300,000,
without their first being offered to Mayfair. Mayfair filed a complaint for rescission of the contract of sale
between Carmelo and Equatorial on the ground that its right of first refusal was violated. Mayfair
obtained a favorable judgment and the decree of rescission became final. When Mayfair tendered the
payment of the purchase price with Carmelo, Equatorial, on the other hand, demanded rentals from
Mayfair alleging itself as owner by reason of the contract of sale up to finality of the decision in the case
filed by Mayfair. Is Equatorial has the right to demand rentals from Mayfair? [Equatorial Realty
Development, Inc. vs. Mayfair Theater, Inc.. 370 SCRA 56 (2001)]

ANSWER:
No. To better understand the peculiarity of the instant case, let us begin with some basic
parameters. Rent is a civil fruit that belongs to the owner of the property producing it by right of
accession. Consequently and ordinarily, the rentals that fell due from the time of the perfection of the sale
to petitioner until its rescission by final judgment should belong to the owner of the property during that
period.
By a contract of sale, one of the contracting parties obligates himself to transfer ownership of and to
deliver a determinate thing and the other to pay therefor a price certain in money or its equivalent.
Ownership of the thing sold is a real right which the buyer acquires only upon delivery of the thing to
him in any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement
that the possession is transferred from the vendor to the vendee. This right is transferred, not by contract
alone, but by tradition or delivery. Non nudis pactis sed traditione dominia rerum transferantur. And
there is said to be delivery if and when the thing sold is placed in the control and possession of the
vendee. Thus, it has been held that while the execution of a public instrument of sale is recognized by law
as equivalent to the delivery of the thing sold, such constructive or symbolic delivery, being merely
presumptive, is deemed negated by the failure of the vendee to take actual possession of the land sold.
Delivery has been described as a composite act, a thing in which both parties must join and the minds
of both parties concur. It is an act by which one party parts with the title to and the possession of the
property and the other acquires the right to and the possession of the same. In its natural
sense, delivery means something in addition to the delivery of property or title; it means transfer of
possession. In the Law on Sales, delivery may be either actual or constructive, but both forms of delivery
contemplate the absolute giving up of the control and custody of the property on the part of the vendor,
and the assumption of the same by the vendee.

Possession Never Acquired by Petitioner

ITC, petitioner never took actual control and possession of the property sold, in view of respondents
timely objection to the sale and the continued actual possession of the property. The objection took the
form of a court action impugning the sale which, as we know, was rescinded by a judgment rendered by
this Court in the mother case. It has been held that the execution of a contract of sale as a form of
constructive delivery is a legal fiction. It holds true only when there is no impediment that may prevent
the passing of the property from the hands of the vendor into those of the vendee. When there is such
impediment, fiction yields to reality - the delivery has not been effected.
Hence, respondents opposition to the transfer of the property by way of sale to Equatorial was a
legally sufficient impediment that effectively prevented the passing of the property into the latter’s
hands.
This was the same impediment contemplated in Vda. de Sarmiento v. Lesaca,[30] in which the Court
held as follows:
The execution of a public instrument gives rise, therefore, only to a prima facie presumption of
delivery. Such presumption is destroyed when the instrument itself expresses or implies that delivery

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was not intended; or when by other means it is shown that such delivery was not effected, because a third
person was actually in possession of the thing. In the latter case, the sale cannot be considered
consummated.
However, the point may be raised that under Article 1164 of the Civil Code, Equatorial as buyer
acquired a right to the fruits of the thing sold from the time the obligation to deliver the property to
petitioner arose.[32] That time arose upon the perfection of the Contract of Sale on July 30, 1978, from
which moment the laws provide that the parties to a sale may reciprocally demand performance. [33]Does
this mean that despite the judgment rescinding the sale, the right to the fruits[34] belonged to, and
remained enforceable by, Equatorial?
Article 1385 of the Civil Code answers this question in the negative, because rescission creates the
obligation to return the things which were the object of the contract, together with their fruits, and the
price with its interest; x x x. Not only the land and building sold, but also the rental payments paid, if any,
had to be returned by the buyer.
At bottom, it may be conceded that, theoretically, a rescissible contract is valid until rescinded.
However, this general principle is not decisive to the issue of whether Equatorial ever acquired the right
to collect rentals. What is decisive is the civil law rule that ownership is acquired, not by mere agreement,
but by tradition or delivery. Under the factual environment of this controversy as found by this Court in
the mother case, Equatorial was never put in actual and effective control or possession of the property
because of Mayfairs timely objection.
In short, the sale to Equatorial may have been valid from inception, but it was judicially rescinded
before it could be consummated. Petitioner never acquired ownership, not because the sale was void, as
erroneously claimed by the trial court, but because the sale was not consummated by a legally
effective delivery of the property sold.

II
Domingo Melad owned a farm and a residential lot. He and his wife, have no children of their own, had
taken into their home as their ward the spouses Felix Danguilan and Isidra Melad. The latter was
Domingo’s niece. The spouses Felix Danguilan and Isidra Melad lived with Domingo Melad and his wife
and helped Domingo with the cultivation of the farm. Thereafter, Domingo executed a private document
giving the spouses Felix Danguilan and Isidra Melad his two lots, on the understanding that the latter
would take care of the grantor and would bury him upon his death, which obligation the spouses fulfilled.
Is the donation of the two lots valid considering that the same were not embodied in a public instrument?
Rabuya, p. 761; Danguilan vs. IAC, 168 SCRA 22 (1988)

Answer:

Yes. It is our view, considering the language of the two instruments that Domingo Melad did intend to
donate the properties to the petitioner, as the private respondent contends. We do not think, however,
that the donee was moved by pure liberality. While truly donations, the conveyances
were onerous donations as the properties were given to the petitioner in exchange for his obligation to
take care of the donee for the rest of his life and provide for his burial. Hence, it was not covered by the
rule in Article 749 of the Civil Code requiring donations of real properties to be effected through a public
instrument. The case at bar comes squarely under the doctrine laid down in Manalo v. De Mesa, 14 where
the Court held:

There can be no doubt that the donation in question was made for a valuable consideration, since
the donors made it conditional upon the donees' bearing the expenses that might be occasioned by
the death and burial of the donor Placida Manalo, a condition and obligation which the donee
Gregorio de Mesa carried out in his own behalf and for his wife Leoncia Manalo; therefore, in order
to determine whether or not said donation is valid and effective it should be sufficient to
demonstrate that, as a contract, it embraces the conditions the law requires and is valid and
effective, although not recorded in a public instrument.

III
X and Y staged a daring bank robbery in Manila at 10:30 in the morning of a regular business day, and
escaped with their loot of two (2) bags, each containing P50,000. During their flight to elude the police, X

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and Y entered the nearby locked house of A, then working in Quezon City office. From A’s house, X and Y
stole a box containing cash totaling P50,000 which box A had been keeping in deposit for his friend B. In
their hurry, X and Y left in A’s bedroom one (1) of the bags which they had taken from the bank. With X
and Y now at large and nowhere to be found, the bag containing P50,000 is now claimed by B, by the
mayor of Manila and by the bank. B claims that the depositary, A, by force majeure had obtained the bag
of money in place of the box of money deposited by B. The Mayor of Manila, on the other hand, claims that
the bag of money should be deposited with the Office of the Mayor as required of the finder by the
provisions of the Civil Code. The bank resists the claim of B and the Mayor of Manila. To whom should A
deliver the bag of money? Decide with reasons. Bar Question (1992) – Aquino, p. 224-225

Answer:

A should deliver the bag of money to the Bank. Art. 719 of the New Civil Code provides that “whoever
finds a movable, which is not treasure, must return it to its previous possessor.” Art. 719 likewise
provides that if the owner is unknown, the finder shall immediately deposit it with the mayor of the city
or municipality where the finding has taken place. Since the bank is known to be the owner of the bag of
money, then the same should be delivered to the bank; there is no need to deposit it with the Mayor.

IV
A gave his diamond ring worth P10,000.00 to his friend B as a birthday gift, which the latter accepted
with thanks. Two weeks later, upon learning that B was courting his (A’s) girlfriend, A asked B to return
the ring. May B legally refused to return the ring? Reasons. Bar Question (1966) – Ulep, p. 519-520

Answer:

If A gave the diamond ring in writing and the latter accepted the gift also in writing, the donation is
perfectly valid. B therefore, can legally refuse to return the ring to A. However, if the donation and/or the
acceptance is not in writing, then the donation is void. B therefore, cannot refuse to return the ring to A.
Formalities prescribed by law for making of donations, whether of personal or real property, are
essential for validity. Thus, the last paragraph of Art. 748 states that “If the value of the personal property
donated exceeds five thousand pesos, the donation and the acceptance shall be made in writing.
Otherwise, the donation shall be void.” (Answer by Prof. Desiderio Jurado)

V
On January 2, 1986, A executed a deed of donation inter vivos of a parcel of land to Dr. B who had earlier
constructed thereon a building in which researches on the dreaded disease AIDS were being conducted.
The deed acknowledged before a notary public was handed over by A to Dr. B who received it. A few days
after, A flew to Davao City. Unfortunately, the airplane he was riding crashed on landing, killing him. Two
days after the unfortunate incident, Dr. B, upon advice of a lawyer, executed a deed acknowledged before
a notary public accepting the donation. Is the donation effective? Explain your answer. Bar Question
(1993) – Ulep, p. 520

Answer:

No. The donation is not effective. The law requires that the separate acceptance of the donee of an
immovable must be done in a public document during the lifetime of the donor. In this case, B executed
the deed of acceptance before a notary public after the donor had already died. (Answer by UP Law
Center)

VI
Spouse Michael and Linda donated a 3 hectare residential land to the City of Baguio on the condition that
the city government would build thereon a public park with a boxing arena, the construction of which
shall commence within 6 months from the date the parties ratify the donation. The donee accepted the
donation and the title to the property was transferred in its name. Five years elapsed but the public park
with the boxing arena was never started. Considering the failure of the donee to comply with the
condition of the donation, the donor spouses sold the property to Ferdinand who then sued to recover
the land from the city government. Will the suit prosper? Bar Question (1991) – Ulep, p. 544-545

Answer:
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No. Ferdinand has no right to recover the land. It is true that the donation was revocable because of
breach of the conditions. But until and unless the donation was revoked, it remains valid. Hence, Spouses
Michael and Linda had no right to sell the land to Ferdinand. One cannot give what he does not have. What
the donors should have done first was to have the donation annulled or revoked. After that was done,
they could validly have disposed of the land in favor of Ferdinand. (Answer by Law Center) A COURT
ACTION is necessary.

VII
Elated that her sister who had been married for five years was pregnant for the first time, Alma donated
P100,000 to the unborn child. Unfortunately, the baby died one hour after delivery. May Alma recover the
P100,000 that she had donated to said baby before it was born considering that the baby died? Stated
otherwise, is the donation valid and binding? Assume that the intra-uterine life of the child is more than
seven months. Explain. Bar Question (1999) – Aquino, p. 237

Answer:

Yes, if the donation was accepted by Alma’s sister. Article 742 of the New Civil Code provides that
“Donations made to conceived and unborn children may be accepted by those who would legally
represent them if they were already born.” Since the child had an intra-uterine life of more than seven
months, it is considered alive at the time it is completely delivered from the mother’s womb. In the present
case, the baby died after one hour after it was delivered from the mother’s womb, hence, the donation is
valid.

VIII
A donated to X a parcel of land in 1980. The donation was made in a public instrument. The deed of
donation was entitled “Donation Inter Vivos” There is, however, a provision in the deed to the effect that,
although the land donated shall be delivered immediately to X upon the perfection of the donation with
full right to enjoy all of the fruits thereof, “title thereto shall pass to the donee only upon the donor’s
death.” Upon the death of A, his widow and only heir, B, brought an action for the recovery of the
property on the ground that the donation is a donation mortis causa and not a donation inter vivos. Will
the action prosper? Bar Question (1990) – Jurado, p. 385

Answer:

Yes, the action will prosper. In Bonsato vs. Court of Appeals, and Howard vs. Court of Appeals, the
Supreme Court declared that in order that a donation will be considered a disposition post mortem, it
should reveal any of the following characteristics:

1) Convey no title or ownership to the transferee before the death of the transferor, or, what
amounts to the same thing, that the transferor should retain the ownership, full or naked, and
control of the property while alive;
2) That before his death the transfer should be revocable by the transferor at will, ad nutum; but
revocability may be provided for indirectly by means of a reserved power in the donor to dispose
of the property conveyed;
3) That the transfer should be void if the transferor should survive the transferee.

It is clear from the facts stated in the problem that the donation reveals the first characteristic. Hence, it is
a disposition post mortem. Therefore, in order that the donation can take effect, it is essential that it must
be made in a will executed in accordance with all of the formalities prescribed by law (Art. 728, CC). Since
this requisite has not been complied with, the donation in the instant case is void or inexistent.

IX
The Roman Catholic Church accepted a donation of a real property located in Lipa City. A deed of
donation was executed, signed by the donor, Don Mariano, and the donee, the Church, as represented by
Fr. Damian. Before the deed could be notarized, Don Mariano died. Is the donation valid? (2014 BAR)

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A: The donation is void. The donation of an immovable property must be in a public instrument in order
for it to be valid. // In this case, the donor died even before the notarization of the deed of donation.
Hence, it does not satisfy the requirement of being in a public instrument for the donation to be valid.

X
Anastacia purchased a house and lot on installments at a housing project in Quezon City. //Subsequently,
she was employed in California and a year later, she executed a deed of donation, duly authenticated by
the Philippine Consulate in Los Angeles, California, donating the house and lot to her friend Amanda. The
latter brought the deed of donation to the owner of the project and discovered that Anastacia left unpaid
installments and real estate taxes. Amanda paid these so that the donation in her favor can be registered
in the project owner's office. Two months later, Anastacia died, leaving her mother Rosa as her sole heir.
Rosa filed an action to annul the donation on the ground that Amanda did not give her consent in the
deed of donation or in a separate public instrument. Amanda replied that the donation was an onerous
one because she had to pay unpaid installments and taxes; hence her acceptance may be implied. Who is
correct? (2000 BAR)

A: Rosa is correct because the donation is void. The property donated was an immovable. For such
donation to be valid, Article 749 of the New Civil Code requires both the donation and the acceptance to
be in a public instrument. There being no showing that Amanda's acceptance was made in a public
instrument, the donation is void. The contention, that the donation is onerous and therefore, need not
comply with Article 749 for validity is without merit. The donation is not onerous because it did not
impose on Amanda the obligation to pay the balance on the purchase price or the arrears in real estate
taxes. Amanda took it upon herself to pay those amounts voluntarily. For a donation to be onerous, the
burden must be imposed by the donor on the donee. In the problem, there is no such burden imposed by
the donor on the donee. The donation not being onerous, it must comply with the formalities of Article
749.

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