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598 SUPREME COURT REPORTS ANNOTATED

Gonzales vs. Court of Appeals

*
G.R. No. 110335. June 18, 2001.

IGNACIO GONZALES, LILIA R. GONZALES, GUSTAVO

R. GONZALES, WIGBERTO R. GONZALES, GILDA
GONZALESSALUTA, 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, vs. 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 DE LA
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.

Contracts; Donation; Land Titles; 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.—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
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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,

______________

* THIRD DIVISION.

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Gonzales vs. Court of Appeals

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.
Same; Same; Same; It is actually the act of registration that
operates to convey registered land or affect title thereto—
registration in a public registry creates constructive notice to the
whole world.—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]).
Same; Same; Same; Agrarian Reform; Non-registration of a
deed of donation does not bind other parties ignorant of a previous
transaction; Tenants-farmers who are beneficiaries of Presidential
Decree No. 27 are considered “third persons” contemplated in laws
on registration.—It is undisputed in this case that the donation
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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.

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Gonzales vs. Court of Appeals

Same; Same; Same; Same; The unregistered deed of donation

cannot operate to exclude the subject land from the coverage of the
Operation Land Transfer of Presidential Decree No. 27.—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 tenantsfarmers.
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 irrigated 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.

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Appeals; Administrative Law; Evidence; Where the factual

findings of the Court of Appeals are at variance with those of an
administrative agency such as the Department of Agrarian
Reform, the Supreme Court is compelled to review the records
presented both in the Court of Appeals and the said Department.—
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.

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Gonzales vs. Court of Appeals

Same; Same; Same; The findings of fact made by the Court of

Ap- peals are conclusive and binding on the Supreme Court even if
contrary to those of the trial court or the administrative agency, so
long as such findings are supported by the records or based on
substantial evidence.—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 those 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.
Agrarian Reform; Social Justice; Our laws on agrarian reform
were enacted primarily because of the realization that there is
urgent need to alleviate the lives of the vast number of poor
farmers in our country and the Supreme Court ought to be an
instrument in achieving a dignified existence for these farmers free
from pernicious restraints and practices.—As a final note, our

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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 hack 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 there’s no better
time to do it than now.

PETITION for review on certiorari of a decision of the

Court of Appeals.

The facts are stated in the opinion of the Court.

     San Jose, Enriquez, Lacas, Santos, Borje & Vendero
for petitioners.
          Joventino A. Cornista and Irineo G. Calderon for
private respondents.

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Gonzales vs. Court of Appeals

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 552A contains
an area of 37.5735 hectares. Herein petitioners are the
successors-in-interest or the children and grandchildren of

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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
APPLICATION FOR administratrix Lilia Gonzales filed an application for
RETENTIONL:
- filed by Lilia retention with the then Ministry of Agrarian Reform,
requesting that the requesting that their property be excluded from the
land donated be
exempted from the coverage of Operation Land Transfer. After initial
Operation Land investigation, Hearing Officer Melchor Pagsolingan
Transfer
recommended the denial of said application for retention
and this action

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Gonzales vs. Court of Appeals

was affirmed by Assistant Secretary of Agrarian Reform DAR'S DECISION:

Benjamin Labayen, in an order dated September 12, 1977. - the land subject of
donation is exempt from
Apparently, however, a reinvestigation was conducted, Operation Land Transfer
resulting in the present Department of Agrarian Reform
(DAR) resolution dated February 23, 1983 recommending - donee already acquired
title since the donation had
that the land subject of the deed of donation, or Lot No. been duly accepted and such
551-C, be exempt from Operation Land Transfer. On acceptance had been known to
the donor
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

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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.)
CA'S DECISION:
Aggrieved by this ruling, private respondents filed a - reversed the ruling of
petition for certiorari with the Court of Appeals which DAR and it upheld the
certificates of Land
rendered its decision on March 15, 1993, reversing the transfer and emancipation
action of the DAR and upholding the certificates of land patents
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.

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Gonzales vs. Court of Appeals

The first and third assigned errors, being interrelated,

shall be jointly discussed.
ISSUE: 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'
CONTENTION:
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 farther 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

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which is within the exemption limit of seven hectares for

each landowner provided under P.D. No. 27. enforceability
Article 749 of the Civil Code provides inter alia that “in of a donation

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 To be valid:
- donation of immovable
of an immovable property, all that is required is for said property must be in a public
donation to be contained in a public document. Registration document

is not necessary for it to be considered valid and effective. To bind third parties:
However, in order to bind third persons, the donation must - it must be in a public
document and it must be
be registered in the Registry of Property (now Registry of registered
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 con-

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Gonzales vs. Court of Appeals

veyance 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:

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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, espe-
606

606 SUPREME COURT REPORTS ANNOTATED

Gonzales vs. Court of Appeals

cially so because in the case at bar, they have been

EMANCIPATION PATENT: 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,
tenantsfarmers are deemed owners of the land they till.
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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 irrigated 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. private
respondents
Petitioners maintain that private respondents knew of knowledge of the
the donation as evidenced by the affidavit and testimony of said donation

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 Bernardo Esguerra as early as 1965 (p. 203,
Rollo), leading one to logically conclude that Villanueva
was no
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Gonzales vs. Court of Appeals

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
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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 those 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.
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Gonzales vs. Court of Appeals

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.
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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 there’s 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.

       Vitug, Panganiban, Gonzaga-Reyes and Sandoval-

Gutierrez, JJ., concur.

Petition denied, judgment affirmed.

Notes.—An unregistered deed of donation is not binding

on third persons. (Sales vs. Court of Appeals, 211 SCRA 858
[1992])
Courts to be vigilant in the protection of the rights of
those who are disadvantaged in life. (Lim vs. Court of
Appeals, 229 SCRA 616 [1994])

——o0o——

609

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