G.R. No.

177667; September 17, 2008

When petitioners' grandmother learned of the scheduled auction, she, as guardian-in-fact of

petitioners, filed with the RTC an Affidavit of Third Party Claim6 and a Very Urgent Motion to
Stop Sale by Execution7 but this was denied in the Order dated June 4, 2003.8 Petitioners'
motion for reconsideration was denied per RTC Order dated July 31, 2003.9

Cleodia U. Francisco and Ceamantha U. Francisco, represented by their grandmother

Dra. Maida G. Uriarte as their Attorney-in-Fact, Petitioners vs. Spouses Jorge C.
Gonzales and Purificacion W. Gonzales, Respondents

Petitioners then filed a petition for certiorari with the CA.

DECISION
Pending resolution by the CA, the RTC issued an Order dated July 8, 2005, granting
respondents' petition for the issuance of a new certificate of title.10 The RTC also issued an
Order on February 13, 2006, granting respondents' motion for the issuance of a writ of
possession.11

AUSTRIA-MARTINEZ, J.:
Assailed in the present petition for review on certiorari under Rule 45 of the Rules of Court is the
Court of Appeals (CA) Decision dated April 30, 2007, which affirmed the Regional Trial Court
(RTC) Orders dated June 4, 2003 and July 31, 2003, denying petitioners' motion to stop
execution sale.

On April 30, 2007, the CA dismissed the petition, the dispositive portion of which reads:
WHEREFORE, premises considered, the Petition is hereby DISMISSED. The Order(s), dated June
4, 2003 and July 31, 2003, of the Regional Trial Court of Muntinlupa City, Br. 256, in Civil Case
No. 01-201, STAND. Costs against the Petitioners. SO ORDERED.12

Petitioners Cleodia U. Francisco and Ceamantha U. Francisco are the minor children of
Cleodualdo M. Francisco (Cleodualdo) and Michele Uriarte Francisco (Michele). In a Partial
Decision dated November 29, 2000 rendered by the RTC of Makati, Branch 144, in Civil Case No.
93-2289 for Declaration of Nullity of Marriage, the Compromise Agreement entered into by the
estranged couple was approved. The Compromise Agreement contained in part the following
provisions:

Hence, herein petition. As prayed for, the Court issued a temporary restraining order on July 11,
2007, enjoining respondents, the RTC, the Register of Deeds, and the Sheriff from implementing
or enforcing the RTC Order dated July 8, 2005, canceling TCT No. 167907 and Order dated
February 13, 2006, issuing a writ of possession, until further orders from the Court.13

7. In their desire to manifest their genuine concern for their children, Cleodia and Ceamantha,
Cleodualdo and Michelle have voluntarily agreed to herein set forth their obligations, rights and
responsibilities on matters relating to their children's support, custody, visitation, as well as to
the dissolution of their conjugal partnership of gains as follows:

Petitioners argue that: (1) they are the rightful owners of the property as the Partial Decision
issued by the RTC of Makati in Civil Case No. 93-2289 had already become final; (2) their
parents already waived in their favor their rights over the property; (3) the adjudged obligation
of Michele in the ejectment case did not redound to the benefit of the family; (4) Michele's
obligation is a joint obligation between her and Matrai, not joint and solidary.14

(a) Title and ownership of the conjugal property consisting of a house and lot located in Ayala
Alabang, Muntinlupa, Metro Manila shall be transferred by way of a deed of donation to Cleodia
and Ceamantha, as co-owners, when they reach nineteen (19) and eighteen (18) years old,
respectively, subject to the following conditions:

The Court finds that it was grave error for the RTC to proceed with the execution, levy and sale
of the subject property. The power of the court in executing judgments extends only to
properties unquestionably belonging to the judgment debtor alone,15 in the present case to
those belonging to Michele and Matrai. One man's goods shall not be sold for another man's
debts.16

The property subject of the Compromise Agreement is a house and lot covered by Transfer
Certificate of Title No. 167907 in the name of Cleodualdo M. Francisco, married to Michele U.
Francisco, with an area of 414 square meters, and located in 410 Taal St., Ayala Alabang
Village, Muntinlupa City.2

To begin with, the RTC should not have ignored that TCT No. 167907 is in the name of
"Cleodualdo M. Francisco, married to Michele U. Francisco." On its face, the title shows that the
registered owner of the property is not Matrai and Michele but Cleodualdo, married to Michele.
This describes the civil status of Cleodualdo at the time the property was acquired.17

Meanwhile, in a case for Unlawful Detainer with Preliminary Attachment filed by spouses Jorge
C. Gonzales and Purificacion W. Gonzales (respondents) against George Zoltan Matrai (Matrai)
and Michele, the Metropolitan Trial Court (MeTC) of Muntinlupa City, Branch 80, rendered a
Decision dated May 10, 2001, ordering Matrai and Michele to vacate the premises leased to
them located in 264 Lanka Drive, Ayala Alabang Village, Muntinlupa City, and to pay back
rentals, unpaid telephone bills and attorney's fees.3

Records show that Cleodualdo and Michele were married on June 12, 1986, prior to the
effectivity of the Family Code on August 3, 1988. As such, their property relations are governed
by the Civil Code on conjugal partnership of gains.

Pending appeal with the RTC of Muntinlupa, Branch 256, an order was issued granting
respondents' prayer for the execution of the MeTC Decision.4 A notice of sale by execution was
then issued by the sheriff covering the real property under Transfer Certificate of Title No. T167907 in the name of Cleodualdo M. Francisco, married to Michele U. Francisco.5

The CA acknowledged that ownership of the subject property is conjugal in nature;18 however,
it ruled that since Michele's obligation was not proven to be a personal debt, it must be inferred
that it is conjugal and redounded to the benefit of the family, and hence, the property may be
held answerable for it.19
1

The Court does not agree.

In the present case, the obligation which the petitioner is seeking to enforce against the
conjugal property managed by the private respondent Lily Yulo was undoubtedly contracted by
Augusto Yulo for his own benefit because at the time he incurred the obligation he had already
abandoned his family and had left their conjugal home. Worse, he made it appear that he was
duly authorized by his wife in behalf of A & L Industries, to procure such loan from the
petitioner. Clearly, to make A & L Industries liable now for the said loan would be unjust and
contrary to the express provision of the Civil Code. (Emphasis supplied)

A wife may bind the conjugal partnership only when she purchases things necessary for the
support of the family, or when she borrows money for that purpose upon her husband's failure
to deliver the needed sum; when administration of the conjugal partnership is transferred to the
wife by the courts or by the husband; or when the wife gives moderate donations for charity.
Failure to establish any of these circumstances means that the conjugal asset may not be bound
to answer for the wife's personal obligation.20 Considering that the foregoing circumstances are
evidently not present in this case as the liability incurred by Michele arose from a judgment
rendered in an unlawful detainer case against her and her partner Matrai.

Similarly in this case, Michele, who was then already living separately from Cleodualdo,28 rented
the house in Lanka Drive for her and Matrais own benefit. In fact, when they entered into the
lease agreement, Michele and Matrai purported themselves to be husband and wife.29
Respondents bare allegation that petitioners lived with Michele on the leased property is not
sufficient to support the conclusion that the judgment debt against Michele and Matrai in the
ejectment suit redounded to the benefit of the family of Michele and Cleodualdo and petitioners.
Thus, in Homeowners Savings and Loan Bank v. Dailo, the Court stated thus:

Furthermore, even prior to the issuance of the Notice of Levy on Execution on November 28,
2001,21 there was already annotated on the title the following inscription:
Entry No. 23341-42/T-167907 Nullification of Marriage
By order of the Court RTC, NCR, Branch 144, Makati City dated July 4, 2001, which become final
and executory on October 18, 2001 declaring the Marriage Contract between Michelle Uriarte
and Cleodualdo M. Francisco, Jr. is null & void ab initio and title of ownership of the conjugal
property consisting of the above-described property shall be transferred by way of a Deed of
Donation to Cleodia Michaela U. Francisco and Ceamantha Maica U. Francisco, as co-owners
when they reach nineteen (19) and eighteen (18) yrs. old to the condition that Cleodualdo, shall
retain usufructuary rights over the property until he reaches the age of 65 yrs. Old.

x x x Ei incumbit probatio qui dicit, non qui negat (he who asserts, not he who denies, must
prove). Petitioners sweeping conclusion that the loan obtained by the late Marcelino Dailo, Jr. to
finance the construction of housing units without a doubt redounded to the benefit of his family,
without adducing adequate proof, does not persuade this Court. Other than petitioners bare
allegation, there is nothing from the records of the case to compel a finding that, indeed, the
loan obtained by the late Marcelino Dailo, Jr. redounded to the benefit of the family.
Consequently, the conjugal partnership cannot be held liable for the payment of the principal
obligation.30

Date of instrument Oct 18, 2001

To hold the property in Taal St. liable for the obligations of Michele and Matrai would be going
against the spirit and avowed objective of the Civil Code to give the utmost concern for the
solidarity and well-being of the family as a unit.31

Date of inscription Oct 22, 2001.22

This annotation should have put the RTC and the sheriff on guard, and they should not have
proceeded with the execution of the judgment debt of Michele and Matrai.

In justifying the levy against the property, the RTC went over the Compromise Agreement as
embodied in the Partial Decision dated November 29, 2000. Oddly, the RTC ruled that there was
no effective transfer of ownership to the siblings Cleodia and Ceamantha Francisco. In the same
breath, the RTC astonishingly ruled that Michele is now the owner of the property inasmuch as
Cleodualdo already waived his rights over the property. The Compromise Agreement must not
be read piece-meal but in its entirety. It is provided therein, thus:

While the trial court has the competence to identify and to secure properties and interest therein
held by the judgment debtor for the satisfaction of a money judgment rendered against him,
such exercise of its authority is premised on one important fact: that the properties levied upon,
or sought to be levied upon, are properties unquestionably owned by the judgment debtor and
are not exempt by law from execution.23 Also, a sheriff is not authorized to attach or levy on
property not belonging to the judgment debtor, and even incurs liability if he wrongfully levies
upon the property of a third person. A sheriff has no authority to attach the property of any
person under execution except that of the judgment debtor.24

7. In their desire to manifest their genuine concern for their children, Cleodia and Ceamantha,
Cleodualdo and Michelle have voluntarily agreed to herein set forth their obligations, rights and
responsibilities on matters relating to their children's support, custody, visitation, as well as to
the dissolution of their conjugal partnership of gains as follows:

It should be noted that the judgment debt for which the subject property was being made to
answer was incurred by Michele and her partner,25 Matrai. Respondents allege that the lease of
the property in Lanka Drive redounded to the benefit of the family.26 By no stretch of one's
imagination can it be concluded that said debt/obligation was incurred for the benefit of the
conjugal partnership or that some advantage accrued to the welfare of the family. In BA Finance
Corporation v. Court of Appeals,27 the Court ruled that the petitioner cannot enforce the
obligation contracted by Augusto Yulo against his conjugal properties with respondent Lily Yulo
because it was not established that the obligation contracted by the husband redounded to the
benefit of the conjugal partnership under Article 161 of the Civil Code. The Court stated:

(a) Title and ownership of the conjugal property consisting of a house and lot located in Ayala
Alabang, Muntinlupa, Metro Manila shall be transferred by way of a deed of donation to Cleodia
and Ceamantha, as co-owners, when they reach nineteen (19) and eighteen (18) years old,
respectively, subject to the following conditions:
a.1. Cleodualdo shall retain usufructuary rights over the property until he reaches the age of 65
years old, with the following rights and responsibilities:
2

x x x x32 (Emphasis supplied)

From the foregoing, it is clear that both Michele and Cleodualdo have waived their title to and
ownership of the house and lot in Taal St. in favor of petitioners. The property should not have
been levied and sold at execution sale, for lack of legal basis.
Verily, the CA committed an error in sustaining the RTC Orders dated June 4, 2003 and July 31,
2003.
WHEREFORE, the petition is GRANTED. The assailed Court of Appeals Decision dated April 30,
2007, affirming RTC Orders dated June 4, 2003 and July 31, 2003, are hereby NULLIFIED and
SET ASIDE. The temporary restraining order issued by the Court per Resolution of July 11, 2007
is hereby made PERMANENT.
Costs against respondents.
SO ORDERED.

[G.R. No. 112483. October 8, 1999]

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.

ELOY IMPERIAL, petitioner vs. 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.

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.

DECISION
GONZAGA-REYES, J.:
Petitioner seeks to set aside the Decision of the Court of Appeals in C.A.-G.R. CV No. 31976,
affirming the Decision of the Regional Trial Court of Legazpi City, 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.

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.

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.

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 32,837-square
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.

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, 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.

The legitime of Victor was determined by the trial court in this manner:
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:

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 abovementioned case, and it was he who moved for execution of judgment. On March 15, 1962, the
motion for execution was duly granted.

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.

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.

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.
The trial court likewise held that the applicable prescriptive period is 30 years under Article 1141
of the Civil Code, reckoned from March 15, 1962, when the writ of execution of the compromise

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.
4

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.

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.

Thus, the dispositive portion of the RTCs Decision of December 13, 1990 reads:
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.

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.

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. It is on the basis of this
second cause of action that private respondents prevailed in the lower courts.

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.

Petitioner next questions the right of private respondents to contest the donation. Petitioner
sources his argument from Article 772 of the Civil Code, thus:

No pronouncement as to damages as they were not sufficiently proved.

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. xxx

SO ORDERED.
The Court of Appeals affirmed the RTC Decision in toto.

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.

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.

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.

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. 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, or
his heir, as in this case, for which no court appointment is required. Petitioners argument,
therefore, that there is substantial identity between Leoncio and private respondents, being
heirs and successors-in-interest of Victor, is unavailing.

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:
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
5

from doing so, as their right to do so is expressly recognized under Article 772, and also in
Article 1053:

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.

If the heir should die without having accepted or repudiated the inheritance, his right shall be
transmitted to his heirs.

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 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 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.

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 vs. Court of Appeals, 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.

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. We find the
necessity for the application of the principle of estoppel by laches in this case, in order to avoid
an injustice.

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; (2) four
years, for non-compliance with conditions of the donation; 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. Interestingly, donations as in the instant case, 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.

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.

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.

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; (2) if such is impracticable, the equivalent value of the
impaired legitime in cash or marketable securities; 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.

From when shall the ten-year period be reckoned? The case of Mateo vs. 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.

We believe this worth mentioning, even as we grant the petition on grounds of prescription and
laches.

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 pre-trial order
bind the parties as to the matters to be taken up in trial, it would be the height of injustice for
6

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.

G.R. No. 145878

The court a quo gave no weight to the tape-recorded barangay proceedings for being hearsay.
Likewise, the court did not consider the dismissal of the ejectment case because the sole issue
in that proceeding was possession, not ownership. It decided the case mostly on documentary
evidence. It ruled:

April 25, 2006

MARCIANO BLANCO, Petitioner, vs. FELIMON RIVERA, Respondent.

RESOLUTION

WHEREFORE, in view of all the foregoing, Judgment is rendered[:]

CORONA, J.:
1

1. Declaring the plaintiff Felimon Rivera, married to Gliceria Diaz as the true and
lawful owner of the property covered by Transfer Certificate of Title No. 501585 of the
Registry of Deeds of Rizal.

Assailed in this petition for review are the decision and resolution of the Court of Appeals
which affirmed the decision4 of Branch 70, Regional Trial Court (RTC) of Binangonan, Rizal in a
civil case5 for quieting of title filed by respondent Felimon Rivera against his half-brother,

2. Ordering the defendant to pay the costs.

SO ORDERED.14

petitioner Marciano Blanco.

On appeal, the Court of Appeals affirmed the RTC decision. It also denied petitioners motion for
reconsideration.

The subject matter of the controversy is a parcel of residential land consisting of 217 square
meters. It was formerly co-owned in equal undivided shares by respondent and Eugenia Reyes
vda. de Rivera, the mother of both petitioner and respondent.

Hence, this petition.

On February 21, 1977, Eugenia sold her undivided share to petitioner. The sale could not be
registered because the original owners copy of the title was allegedly in the custody of
respondent who refused to surrender the same. The deed of sale6 did not have the consent of
respondent. Eugenia, however, executed an affidavit7 alleging that she had already notified her
co-owner Felimon and other possible redemptioners of the sale of the property.

Essentially, the issue before us is who, between petitioner and respondent, has the better right
over Eugenias portion of the property.
Petitioner contends that respondent did not act in good faith when he purchased it from their
mother and had the sale registered in his name. Being the first buyer, petitioner claimed to have
a better right to own the property.

Three years later, on April 19, 1980, Eugenia again sold her undivided share, this time to her coowner, respondent Felimon, through a quitclaim deed8 and for a consideration of P9,785.
Respondent registered the sale with the register of deeds of Rizal. He was issued TCT No.
501585 9 on May 21, 1980. He thereafter took actual and physical possession of the property
and had since then paid the real property tax thereon.10

When immovable property is sold to two different buyers at different times, ownership is
determined in accordance with Article 1544 of the Civil Code15 which provides:
ART. 1544. xxx

Sometime in 1982, petitioner, who was residing on one-fourth (1/4) of the property, heard
about the sale of the property to respondent. He confronted their mother Eugenia who sought
the assistance of barangay authorities in San Pedro, Angono, Rizal. In the barangay
proceedings,11 petitioner exhibited the deed of sale and the affidavit executed by Eugenia
attesting to the sale of the property and the prior notice to her co-owner Felimon Rivera.

Should it be immovable property, the ownership shall pertain to the person acquiring it who in
good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person, who in good faith was
first in the possession; and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith.

Petitioner maintained that he tried unsuccessfully to register his deed of sale but, when asked
by the registrar of deeds to produce the original TCT as a requirement for registration, all he
could show was a photocopy inasmuch as the original was in respondents possession. He
claimed that he requested the original TCT from his mother and respondent but they refused.
After several days, petitioner reiterated his request to respondent but the latter ignored him.

The requirement of the law is two-fold: acquisition in good faith and registration in good faith.16
The rationale behind this was laid out in Uraca v. Court of Appeals:17
The prior registration of the disputed property by the second buyer does not by itself confer
ownership or a better right over the property. Article 1544 requires that such registration must
be coupled with good faith. Jurisprudence teaches us that "the governing principle is primus in
tempore, potior jure (first in time, stronger in right). Knowledge gained by the first buyer of the
second sale cannot defeat the first buyers rights except where the second buyer registers in
good faith the second sale ahead of the first, as provided by the Civil Code. Such knowledge of
the first buyer does not bar her from availing of her rights under the law, among them, to

For his part,12 respondent denied that he knew of the alleged prior sale of the property to
petitioner. When he learned about petitioners claim, he filed an ejectment case to oust him
from the property.13 Unfortunately, the ejectment suit was decided in favor of petitioner.
On March 3, 1991, respondent filed the present civil case for quieting of title. Eugenia failed to
testify because of her untimely demise.
8

register first her purchase as against the second buyer. But in converso, knowledge gained by
the second buyer of the first sale defeats his right even if he is first to register the second sale,
since such knowledge taints his prior registration with bad faith. This is the price exacted by
Article 1544 of the Civil Code for the second buyer being able to displace the first buyer; that
before the second buyer can obtain priority over the first, he must show that he acted in good

SO ORDERED.

faith throughout (i.e. in ignorance of the first sale and of the first buyers right) from the time
of acquisition until the title is transferred to him by registration or failing registration, by delivery
of possession.)
The vendee who first registers the sale in good faith in the registry of property has a preferred
right over another vendee who has not registered his title. This is true even if the latter is in
actual possession of the immovable property. More credit is given to registration than to actual
possession.18
But the law is clear mere registration of title is not enough. Good faith must concur with
registration.19 To be in a priority status, the second purchaser must be in good faith, that is,
without knowledge of the previous alienation by the vendor to another.20 What holds relevance
and materiality is not whether the second buyer is a buyer in good faith but whether he
registers such second sale in good faith, meaning, without knowledge of any defect in the title
of the property sold.21
Here, both the trial and appellate courts declared respondent to be the true owner of the
property. He was uncontestedly the first to register his ownership over the property, untainted
by proof of any knowledge of the prior sale. Respondents acquisition and registration of the
property were therefore in good faith.
The appellate court elucidated:
xxx. Although defendant-appellant (petitioner) claims that he asked the owners copy of the title
from the plaintiff-appellant (respondent), the same was vehemently denied by the latter.
Defendant-appellant presented the affidavit of their mother attesting that the subject lot was
sold to him and that notice was given to the co-owner, however, proof of the said notice was
never presented nor attached to the said affidavit. Defendant-appellant failed to prove that
there was any notice, aside from the statement in the said affidavit. x x x We agree with the
ruling of the lower court in not giving much weight to the affidavit of Eugenia Reyes Vda. de
Rivera for the reason that plaintiff-appellee denied having been told of the sale in his testimony
in open court. The infirmity of affidavits as a specie of evidence is a matter of judicial
experience. As such, an affidavit taken ex-parte is generally considered to be inferior to
testimonies in open court.22
Besides, even if petitioners claim were true, he would nonetheless still be guilty of laches. 23 He
failed to utilize, for an unreasonable and unexplained length of time, the available legal
remedies24 for his claim over the property to be recognized not only by respondent but all other
persons. Beginning from his alleged acquisition of the land in 1977, to his discovery of
respondents registration in 1982, up to the filing of this case in 1991, more than 14 years had
lapsed without any legal action on his part to secure his ownership over the property. His failure
to display zealousness about his alleged ownership is fatal to his claim.
WHEREFORE, the petition is hereby DENIED and the assailed decision and resolution of the
Court of Appeals AFFIRMED.
Costs against petitioner.
9

G.R. No. 165831

February 23, 2007

a) As downpayment, the amount of THIRTY NINE THOUSAND FOUR

HUNDRED PESOS (P39,400),

SPS. COL. PEDRO L. LUMBRES and REBECCA ROARING, Petitioners, vs. SPS. PEDRO B.
TABLADA, JR. and ZENAIDA N. TABLADA, Respondents.

b) The amount of TWO HUNDRED THIRTY THOUSAND PESOS (P230,000).

To be paid on or before upon the release of Pag-Ibig Loan.

DECISION

c) The SEVENTY THOUSAND ONE HUNDRED (P70,100) to be paid upon the

signing of this contract. Balance of SEVENTY THOUSAND (P70,000) by
monthly installments of ELEVEN THOUSAND SIX HUNDRED SIXTY SIX & 70
Cents PESOS (11,666.70) to start on the 30th day of January, 1995 until
said balance is fully paid subject to interest at the rate of ___ percent ( )
per annum on the balance outstanding or the prevailing bank interest rate
whichever is higher.

GARCIA, J.:
Assailed and sought to be set aside in this petition for review under Rule 45 of the Rules of
Court are the following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 82617, to wit:
1. Decision1 dated August 31, 2004 reversing and setting aside the appealed Order of
the Regional Trial Court (RTC) of Calamba City, Branch 37, and reinstating an earlier
decision of the Municipal Trial Court in Cities (MTCC), Calamba City, which dismissed
the petitioners' complaint for ejectment against the herein respondents; and

xxx xxx xxx

On January 16, 1996, after having been paid the sum total of P179,500.00, which the
respondents claim to be the full purchase price of the subject lot, Spring Homes executed a
Deed of Absolute Sale4 in favor of the respondents. In the deed, Lot 8, Block 3 was already
made to appear as covered by TCT No. T-284037. Respondents accumulated payments totaling
P179,500.00 consisted of the following: P39,400.00 by way of downpayment; P70,100.00 paid
on signing of the contract; and P70,000.00 paid in monthly installments of P11,666.70 each. All
such payments are evidenced by receipts of the corresponding transactions. Because the
anticipated Pag-Ibig loan failed to materialize, the P230,000.00, which, under the Contract to
Sell, was supposed to be paid upon release of the loan, was left unpaid.

2. Resolution2 dated October 27, 2004 denying the petitioners' motion for
reconsideration.
From the facts on record, it appears that this is a case of double sale of a lot covered by
Transfer Certificate of Title (TCT) No. 473055 with an area of 105 square meters, more
particularly identified as Lot 8, Block 3 of the Spring Homes Subdivision, Brgy. Bucal, Calamba
City. Both parties to the case present Deeds of Absolute Sale for the same lot from the same
seller, Spring Homes Subdivision Company, Inc. (Spring Homes, hereafter).

Respondents later declared the subject lot for taxation purposes under Tax Declaration No. 0191342 and paid the corresponding real property taxes thereon. Using their own funds, they
caused the construction thereon of a residential house, which they presently occupy, the costs
of which amounted to P356,516.50. On June 9, 1996, a Certificate of Occupancy was issued to
them by the Office of the Building Official and the house was declared in their names.

Reviewed, the records disclose that on January 9, 1995, Spring Homes, former owner of the
parcel of land in dispute, entered into a pro forma Contract to Sell3 with the respondent
spouses. The prepared typewritten contract, with the blank spaces therein merely filled up,
contains the designation of the parcel sold, the price per square meter and the stipulation as to
payment, to wit:

With the execution of the aforesaid Deed of Absolute Sale, the respondent spouses sent a
demand letter dated May 4, 1996 to Spring Homes for the transfer and release to them of the
original or owner's copy of TCT No. T-284037. The acting president/chairperson of Spring
Homes, Bertha L. Pasic, promised to deliver the said title and even apologized for the delay.
However, to their great dismay, the spouses subsequently learned that TCT No. T-284037 was
canceled and a new one issued to the petitioners. On account thereof, the respondent spouses
filed with the RTC of Calamba City a civil suit against the petitioners, Spring Homes and the
Register of Deeds of Calamba City for nullification of title, reconveyance and damages, docketed
as Civil Case No. 3117-2001-C.

1. That the SELLER, for and in consideration of the payments and other terms and
conditions hereinafter to be designated, has offered to sell and the BUYER has agreed
to buy certain parcel of land more particularly described as follows:
Blk No.
P-111

Lot No.

Area
Sq. Meter

Price
Per Sq. Meter

105

P 1,500

42

6,000

Total Selling
Price

It appears, however, that after the filing of Civil Case No. 3117-2001-C, the petitioners filed a
civil case before the RTC of Calamba City, Laguna, Branch 37, against Spring Homes, docketed
as Civil Case No. 2194-95-C. On November 17, 1996, the petitioners filed with the Register of
Deeds of Calamba City a Notice of Lis Pendens over all the properties registered in the name of
the said corporation, including Lot 8, Block 3 covered by TCT No. T-284037. On September 3,
1997, the RTC issued an order attaching all of Spring Homes properties, including Lot 8, Block 3.
Premiere Development Bank subsequently intervened in Civil Case No. 2194-95-C because all
said properties had been mortgaged to it.

P 409,500
2. That in consideration of the foregoing agreement, the BUYER obligates himself to
pay to the SELLER the sum of FOUR HUNDRED NINE THOUSAND FIVE HUNDRED
PESOS (P409,500), Philippine Currency, payable as follows:
10

On September 21, 1999, the petitioner spouses entered into a Compromise Agreement in Civil
Case No. 2194-95-C with Spring Homes and Premiere Development Bank, which was approved
by the RTC, Branch 37, on October 28, 1999. In that Compromise Agreement, both Spring
Homes and Premiere Development Bank recognized the rights and interests of the petitioner
spouses over the parcels of land covered by twenty (20) titles and containing an aggregate area
of 2,499 square meters. The subject property (Lot 8, Block 3) was among the properties
covered by the aforementioned compromise agreement that were judicially assigned,
transferred and conveyed to the petitioners.

Applying the provisions of Articles 1350, 1352 and 1409 of the Civil Code, the RTC deemed the
Deed of Absolute Sale in favor of the respondents void ab initio for want of valid consideration.
With their motion for reconsideration having been denied by the RTC in its subsequent Order of
February 12, 2004, the respondent spouses then went to the CA on a petition for review in CAG.R. SP No. 82617.1awphi1.net
In the herein assailed decision7 dated August 31, 2004, the CA granted the respondents'
petition, thereby reversing the assailed Orders of the RTC and reinstating the earlier decision of
the MTCC. Their motion for reconsideration having been denied by the CA in its equally assailed
Resolution8 of October 27, 2004, petitioners are now before us via the instant recourse raising
the following issues:

Meanwhile, due to the respondents alleged failure to pay the P230,000.00 unpaid balance as
per the Contract to Sell earlier adverted to despite demands, the subject lot was sold by Spring
Homes to the petitioners, again by way of a Deed of Absolute Sale executed on December 22,
2000 for and in consideration of the sum of P157,500.00. The mortgage on the lot was released
by Premiere Development Bank on January 20, 2001. Subsequently, on January 30, 2001, TCT
No. T-473055 covering the subject lot was issued in petitioners' favor.

1. Whether the CA committed reversible error or grave abuse of discretion when it

found the purchase price of the contested lot to be P157,500.00 instead of the
stipulated price of P409,500.00 in the Contract to Sell dated January 9, 1995 despite
the fact that the existence and validity of said contract was never put in issue;

The instant case cropped up when, asserting their ownership of the subject lot on the basis of
TCT No. T-473055, the petitioners demanded of the respondents to vacate said lot and to pay
them the rentals due thereon. Their demands having come to naught, the petitioner spouses
then filed in the MTCC, Calamba City, a complaint for ejectment on October 2, 2001 against
respondent Tabladas and all persons claiming rights under them. The complaint was docketed in
the MTCC as Civil Case No. 4335-01.

2. Whether the CA committed reversible error or grave abuse of discretion when it did
not find that the sale of the subject lot to the respondents was void due to lack of
consideration since it was merely used by the respondents to obtain a loan of
P230,000.00 from the PAG-IBIG Fund and despite the fact that said lot was already
mortgaged by Spring Homes to the Premiere Development Bank since January 21,
1993 for P4,800,000.00;

In a decision5 dated May 28, 2002, the MTCC dismissed the petitioners' ejectment complaint, its
basis being the rule on double sale set out in Article 1544 of the Civil Code. Finding that the
petitioners registration of their title over the subject lot was done in bad faith, that court ruled
for the respondents.

3. Whether the CA committed reversible error or grave abuse of discretion when it

ruled that the petitioners acquired the lot in question in bad faith despite the judicial
assignment of rights and interests to them over the lot in question in RTC Civil Case
No. 2194-95-C, and their having had it titled in their names with the Register of
Deeds;

Aggrieved, the petitioners appealed to the RTC. In an Order6 dated October 16, 2003, the RTC
reversed and set aside the MTCC decision and ordered the respondent spouses to vacate Lot 8,
Block 3, to surrender the possession thereof to the petitioners and to pay the latter reasonable
rentals from the time of judicial demands until the premises is surrendered to them.

4. Whether the CA committed a reversible error or grave abuse of discretion when it

did not find the respondents to be bad faith builders and possessors of the property in
question; and

While conceding that there is a double sale in this case, the RTC, in its aforementioned Order,
refused to apply the provisions of Article 1544 of the Civil Code in settling the issue of
possession. Instead, it went to the extent of determining the validity and due execution of the
separate Deeds of Absolute Sale executed by Spring Homes in favor of the herein contending
parties.

5. Whether the CA committed reversible error or grave abuse of discretion when it

manifestly misapprehended the relevant facts.
We DENY.

In holding that the petitioners have superior right on the subject lot over the respondents, the
RTC declared that there was no valid deed of absolute sale executed in favor of the respondents
for the following reasons:

Before proceeding with a discussion of the issues laid out above, it must be stressed that the
present case is one for ejectment. As such, our judgment hereon is effective only with respect
to possession. It does not bind the title or affect the ownership of the lot in question. Such
judgment shall not bar an action between the same parties respecting the title to said property. 9
The only issue for resolution is who, as between the petitioners and the respondents, is entitled
to the physical or material possession of the property involved, independent of their respective
claims of ownership thereof.10

1. Even if there was a perfected Contract to Sell between respondents and Spring
Homes, the former failed to pay the full purchase price in installments that gave
Spring Homes the right to cancel the contract; and
2. The execution of the Deed of Absolute Sale in favor of the respondents on January
16, 1996 is not a transfer of ownership but merely to use it as a collateral for a loan
of P230,000.00 from the Pag-Ibig Fund which, incidentally, did not materialize.

When acting as an ejectment court, the Metropolitan, Municipal and Circuit Trial Courts'
jurisdiction is limited to the determination of the issue on possession de facto and not
possession de jure.11 By way of exception, however, if the issue of possession depends on the
resolution of the issue of ownership, which is sufficiently alleged in the complaint, as here, the
11

MTCC may resolve the issue of ownership although the resulting judgment would be conclusive
only with respect to possession but not to the ownership of the property. 12

loan. The land area of the house to be constructed was pegged at 42 square meters because of
the following restrictions in the Contract to Sell:

In claiming their right of possession over the subject lot, petitioners made much of the judicially
approved Compromise Agreement in Civil Case No. 2194-95-C, wherein Spring Homes rights
and interests over the said lot under its Contract to Sell with the respondents were effectively
assigned to them. Petitioners argue that out of the whole P409,500.00 purchase price under the
respondents Contract to Sell with Spring Homes, the respondents were able to pay only
P179,500.00, leaving a balance of P230,000.00.

9. The lot(s) subject matter of this contract are subject to the following restrictions:
a) Any building which may be constructed at anytime in said lot(s) must be strong x x
x. Said building must not be constructed at a distance of less than (2) meters from
any boundaries of the lot(s).
b) The total area to be voted to buildings or structures shall not exceed eighty percent
(80%) of the total area of the lot(s).

Upon scrutiny, however, the CA astutely observed that despite there being no question that the
total land area of the subject lot is 105 square meters, the Contract to Sell executed and
entered into by Spring Homes and the respondent spouses states:

Looking at the above-quoted portion of the Contract to Sell, the CA found merit in the
respondents' contention that the total selling price of P409,500 includes not only the price of the
lot but also the cost of the house that would be constructed thereon. We are inclined to agree.
The CA went on to say:

3. That the SELLER, for and in consideration of the payments and other terms and
conditions hereinafter to be designated, has offered to sell and the BUYER has agreed
to buy certain parcel of land more particularly described as follows:
Blk No.
P-111

Lot No.

Area
Sq. Meter

Price
Per Sq. Meter

105

P 1,500

42

6,000

It could be argued that the contract to sell never mentions the construction of any house or
building on the subject property. Had it been the intention of the parties that the total selling
price would include the amount of the house that would be taken from a loan to be obtained
from Pag-Ibig, they could have specified so. However, one should not lose sight of the fact that
the contract to sell is an accomplished form. [Respondents,] trusting Spring Homes, could not
be expected to demand that another contract duly reflective of their agreements be utilized
instead of the accomplished form. The terms and conditions of the contract may not
contemplate the inclusion of the cost of the house in the total selling price, but the entries
typewritten thereon sufficiently reveal the intentions of the parties.

Total Selling Price

P 409,500

The position of the [respondents] finds support in the documents and subsequent actuations of
Bertha Pasic, the representative of Spring Homes. [Respondents] undeniably proved that they
spent their own hard-earned money to construct a house thereon after their Pag-Ibig loan did
not materialize. It is highly unjust for the [respondents] to pay for the amount of the house
when the loan did not materialize due to the failure of Spring Homes to deliver the owner's
duplicate copy of TCT No. T-284037.

The two deeds of absolute sale as well as the respondents Tax Declaration No. 019-1342
uniformly show that the land area of the property covered by TCT No. T-284037 is 105 square
meters. The parties never contested its actual land area.
However, while there is only one parcel of land being sold, which is Lot 8, Blk. 3, paragraph "1"
above of the Contract to Sell speaks of two (2) land areas, namely, "105" and "42," and two (2)
prices per square meter, to wit: "P1,500" and "P6,000." As correctly observed by the CA:

xxx xxx xxx

In does not require much imagination to understand why figures "3," "8," "105" and "P1,500"
appear in the paragraph "1" of the Contract to Sell. Certainly "3" stands for "Blk. No.," "8"
stands for "Lot No.," "105" stands for the land area and "P1,500" stands for the price per square
meter. However, this Court is perplexed as regards figures "42" and "6,000" as they are not
accompanied by any "Blk. No." and/or "Lot No." In other words, while there is only one parcel of
land being sold, paragraph "1" of the Contract to Sell contains two land areas and two prices per
square meter. There is no reason for the inclusion of land area in the computation when it was
established beyond cavil that the total area being sold is only 105 square meters. Likewise,
there is no explanation why there is another rate for the additional 42 square meters, which was
pegged at P6,000 per square meter, while that of 105 square meters was only P1,500.00.

If the total selling price was indeed P409,500.00, as [petitioners] would like to poster, said
amount should have appeared as the consideration in the deed of absolute sale dated January
15, 1996. However, only P157,500.00 was stated. The amount stated in the Deed of Absolute
Sale dated January 15, 1996 was not only a portion of the selling price, because the Deed of
Sale dated December 22, 2000 also reflected P157,500.00 as consideration. It is not shown that
[petitioners] likewise applied for a loan with Pag-Ibig. The reasonable inference is that the

consistent amount stated in the two Deeds of Absolute Sale was the true selling
price as it perfectly jibed with the computation in the Contract to Sell. [Emphasis
supplied] (Words in brackets ours).

We find the CA's reasoning to be sound. At any rate, the execution of the January 16, 1996
Deed of Absolute Sale in favor of the respondents effectively rendered the previous Contract to
Sell ineffective and canceled. Furthermore, we find no merit in petitioners' contention that the
first sale to the respondents was void for want of consideration. As the CA pointed out in its
assailed decision:

The CA could only think of one possible explanation: the Contract to Sell refers only to a single
lot with a total land area of 105 square meters. The 42 square meters mentioned in the same
contract and therein computed at the rate of P6,000 per square meter refer to the cost of the
house which would be constructed by the respondents on the subject lot through a Pag-Ibig
12

Other than the [petitioners'] self-serving assertion that the Deeds of Absolute Sale was executed
solely for the purpose of obtaining a Pag-Ibig loan, no other concrete evidence was tendered to
justify the execution of the deed of absolute sale. They failed to overcome the clear and
convincing evidence of the [respondents] that as early as July 5, 1995 the latter had already
paid the total amount of P179,500.00, much bigger than the actual purchase price for the
subject land. (Words in brackets ours.)

prior possession can recover such possession even against the owner himself. Whatever may be
the character of the defendant's prior possession, whether it be legal or illegal, since he had in
his favor priority in time, he has the security that entitles him to remain on the property until
he is lawfully ejected therefrom by a person having a better right by accion publciana or accion
reivindicatoria.15
The respondents are the current occupants of the subject lot. They had constructed their
residential house thereon and are living there at present. The action for ejectment was
fashioned to provide a speedy, albeit temporary, remedy to the dispossessed party while the
issue of lawful possession or de jure possession is pending or about to be filed. The remedy of
ejectment ought to maintain the status quo and prevent the party-litigants from further
aggravating the situation and causing further damage.

Having stated that the Deed of Absolute Sale executed in favor of the respondent spouses is
valid and with sufficient consideration, the MTCC correctly applied the provisions of Article 1544
of the Civil Code. Article 1544 reads:
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should
be movable property.

WHEREFORE, the instant petition is DENIED and the assailed decision and resolution of the
CA are AFFIRMED.

Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.

Costs against the petitioners.

Should there be no inscription, the ownership shall pertain to the person who in good faith was
first in the possession, and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith. [Emphasis provided]

SO ORDERED.

Notwithstanding the fact that the petitioners, as the second buyer, registered their Deed of
Absolute Sale, in contrast to the Deed of Sale of the respondents which was not registered at all
precisely because of Spring Homes failure to deliver the owners copy of TCT No. T-284037, the
respondents right could not be deemed defeated as the petitioners are in bad faith. Petitioners
cannot claim good faith since at the time of the execution of the Compromise Agreement in Civil
Case No. 2194-95-C, they were indisputably and reasonably informed that the subject lot was
previously sold to the respondents. In fact, they were already aware that the respondents had
constructed a house thereon and are presently in possession of the same.
Knowledge gained by the second buyer of the first sale defeats his rights even if he is the first
to register the second sale because such knowledge taints his prior registration with bad faith.
For the second buyer to displace the first, he must show that he acted in good faith throughout
(i.e. in ignorance of the first sale and of the first buyer's rights) from the time of acquisition until
the title is transferred to him by registration.13
Consequently, the respondents are the buyers entitled to the physical possession of the subject
lot since the prevailing doctrine is that as between the buyer who is in possession of a Torrens
title but who has acquired it in bad faith and the first buyer who failed to have his title recorded
in the Registry of Property, the first buyer must prevail.14
Hence, there was nothing to cede or transfer to the petitioners when the Compromise
Agreement in Civil Case No. 2194-95-C was entered into on October 28, 1999 insofar as the
subject lot is concerned as it was already sold to and fully paid for by the respondents as early
as January 16, 1996 when the Absolute Deed of Sale was executed in their favor by Spring
Homes. More so that Spring Homes has no more to sell to the petitioners when it executed in
the latters favor the second deed of absolute sale on December 22, 2000.
One last note, regardless of the actual condition of the title to the property, the party in
peaceful, quiet possession thereof shall not be ejected therefrom. Thus, a party who can prove
13

G.R. No. 112127 July 17, 1995

Petitioner appealed to the Court of Appeals which on 18 June 1993 ruled that the annotations at
the back of petitioner's certificate of title were resolutory conditions breach of which should
terminate the rights of the donee thus making the donation revocable.

CENTRAL PHILIPPINE UNIVERSITY, petitioner, vs. COURT OF APPEALS, REMEDIOS

FRANCO, FRANCISCO N. LOPEZ, CECILIA P. VDA. DE LOPEZ, REDAN LOPEZ AND
REMARENE LOPEZ, respondents.

The appellate court also found that while the first condition mandated petitioner to utilize the
donated property for the establishment of a medical school, the donor did not fix a period within
which the condition must be fulfilled, hence, until a period was fixed for the fulfillment of the
condition, petitioner could not be considered as having failed to comply with its part of the
bargain. Thus, the appellate court rendered its decision reversing the appealed decision and
remanding the case to the court of origin for the determination of the time within which
petitioner should comply with the first condition annotated in the certificate of title.

BELLOSILLO, J.:
CENTRAL PHILIPPINE UNIVERSITY filed this petition for review on certiorari of the decision of
the Court of Appeals which reversed that of the Regional Trial Court of Iloilo City directing
petitioner to reconvey to private respondents the property donated to it by their predecessor-ininterest.

Petitioner now alleges that the Court of Appeals erred: (a) in holding that the quoted
annotations in the certificate of title of petitioner are onerous obligations and resolutory
conditions of the donation which must be fulfilled non-compliance of which would render the
donation revocable; (b) in holding that the issue of prescription does not deserve "disquisition;"
and, (c) in remanding the case to the trial court for the fixing of the period within which
petitioner would establish a medical college. 2

Sometime in 1939, the late Don Ramon Lopez, Sr., who was then a member of the Board of
Trustees of the Central Philippine College (now Central Philippine University [CPU]), executed a
deed of donation in favor of the latter of a parcel of land identified as Lot No. 3174-B-1 of the
subdivision plan Psd-1144, then a portion of Lot No. 3174-B, for which Transfer Certificate of
Title No. T-3910-A was issued in the name of the donee CPU with the following annotations
copied from the deed of donation

We find it difficult to sustain the petition. A clear perusal of the conditions set forth in the deed
of donation executed by Don Ramon Lopez, Sr., gives us no alternative but to conclude that his
donation was onerous, one executed for a valuable consideration which is considered the
equivalent of the donation itself, e.g., when a donation imposes a burden equivalent to the
value of the donation. A gift of land to the City of Manila requiring the latter to erect schools,
construct a children's playground and open streets on the land was considered an onerous
donation. 3 Similarly, where Don Ramon Lopez donated the subject parcel of land to petitioner
but imposed an obligation upon the latter to establish a medical college thereon, the donation
must be for an onerous consideration.

1. The land described shall be utilized by the CPU exclusively for the establishment
and use of a medical college with all its buildings as part of the curriculum;
2. The said college shall not sell, transfer or convey to any third party nor in any way
encumber said land;
3. The said land shall be called "RAMON LOPEZ CAMPUS", and the said college shall
be under obligation to erect a cornerstone bearing that name. Any net income from
the land or any of its parks shall be put in a fund to be known as the "RAMON LOPEZ
CAMPUS FUND" to be used for improvements of said campus and erection of a
building thereon. 1

Under Art. 1181 of the Civil Code, on conditional obligations, the acquisition of rights, as well as
the extinguishment or loss of those already acquired, shall depend upon the happening of the
event which constitutes the condition. Thus, when a person donates land to another on the
condition that the latter would build upon the land a school, the condition imposed was not a
condition precedent or a suspensive condition but a resolutory one. 4 It is not correct to say that
the schoolhouse had to be constructed before the donation became effective, that is, before the
donee could become the owner of the land, otherwise, it would be invading the property rights
of the donor. The donation had to be valid before the fulfillment of the condition. 5 If there was
no fulfillment or compliance with the condition, such as what obtains in the instant case, the
donation may now be revoked and all rights which the donee may have acquired under it shall
be deemed lost and extinguished.

On 31 May 1989, private respondents, who are the heirs of Don Ramon Lopez, Sr., filed an
action for annulment of donation, reconveyance and damages against CPU alleging that since
1939 up to the time the action was filed the latter had not complied with the conditions of the
donation. Private respondents also argued that petitioner had in fact negotiated with the
National Housing Authority (NHA) to exchange the donated property with another land owned
by the latter.
In its answer petitioner alleged that the right of private respondents to file the action had
prescribed; that it did not violate any of the conditions in the deed of donation because it never
used the donated property for any other purpose than that for which it was intended; and, that
it did not sell, transfer or convey it to any third party.

The claim of petitioner that prescription bars the instant action of private respondents is
unavailing.
The condition imposed by the donor, i.e., the building of a medical school upon the
land donated, depended upon the exclusive will of the donee as to when this
condition shall be fulfilled. When petitioner accepted the donation, it bound itself to
comply with the condition thereof. Since the time within which the condition should be
fulfilled depended upon the exclusive will of the petitioner, it has been held that its
absolute acceptance and the acknowledgment of its obligation provided in the deed of
donation were sufficient to prevent the statute of limitations from barring the action of
private respondents upon the original contract which was the deed of donation. 6

On 31 May 1991, the trial court held that petitioner failed to comply with the conditions of the
donation and declared it null and void. The court a quo further directed petitioner to execute a
deed of the reconveyance of the property in favor of the heirs of the donor, namely, private
respondents herein.

14

Moreover, the time from which the cause of action accrued for the revocation of the donation
and recovery of the property donated cannot be specifically determined in the instant case. A
cause of action arises when that which should have been done is not done, or that which should
not have been done is done. 7 In cases where there is no special provision for such computation,
recourse must be had to the rule that the period must be counted from the day on which the
corresponding action could have been instituted. It is the legal possibility of bringing the action
which determines the starting point for the computation of the period. In this case, the starting
point begins with the expiration of a reasonable period and opportunity for petitioner to fulfill
what has been charged upon it by the donor.

SO ORDERED.

Quiason and Kapunan, JJ., concur.

Separate Opinions
DAVIDE, JR., J., dissenting:
I agree with the view in the majority opinion that the donation in question is onerous
considering the conditions imposed by the donor on the donee which created reciprocal
obligations upon both parties. Beyond that, I beg to disagree.

The period of time for the establishment of a medical college and the necessary buildings and
improvements on the property cannot be quantified in a specific number of years because of the
presence of several factors and circumstances involved in the erection of an educational
institution, such as government laws and regulations pertaining to education, building
requirements and property restrictions which are beyond the control of the donee.

First of all, may I point out an inconsistency in the majority opinion's description of the donation
in question. In one part, it says that the donation in question is onerous. Thus, on page 4 it
states:

Thus, when the obligation does not fix a period but from its nature and circumstances it can be
inferred that a period was intended, the general rule provided in Art. 1197 of the Civil Code
applies, which provides that the courts may fix the duration thereof because the fulfillment of
the obligation itself cannot be demanded until after the court has fixed the period for
compliance therewith and such period has arrived. 8

We find it difficult to sustain the petition. A clear perusal of the conditions

set forth in the deed of donation executed by Don Ramon Lopez, Sr., give
us no alternative but to conclude that his donation was onerous, one
executed for a valuable consideration which is considered the equivalent of
the donation itself, e.g., when a donation imposes a burden equivalent to
the value of the donation . . . . (emphasis supplied)

This general rule however cannot be applied considering the different set of circumstances
existing in the instant case. More than a reasonable period of fifty (50) years has already been
allowed petitioner to avail of the opportunity to comply with the condition even if it be
burdensome, to make the donation in its favor forever valid. But, unfortunately, it failed to do
so. Hence, there is no more need to fix the duration of a term of the obligation when such
procedure would be a mere technicality and formality and would serve no purpose than to delay
or lead to an unnecessary and expensive multiplication of suits. 9 Moreover, under Art. 1191 of
the Civil Code, when one of the obligors cannot comply with what is incumbent upon him, the
obligee may seek rescission and the court shall decree the same unless there is just cause
authorizing the fixing of a period. In the absence of any just cause for the court to determine
the period of the compliance, there is no more obstacle for the court to decree the rescission
claimed.

Yet, in the last paragraph of page 8 it states that the donation is basically a gratuitous
one. The pertinent portion thereof reads:
Finally, since the questioned deed of donation herein is basically a
gratuitous one, doubts referring to incidental circumstances of a gratuitous
contract should be resolved in favor of the least transmission of rights and
interest . . . (emphasis supplied)
Second, the discussion on conditional obligations is unnecessary. There is no conditional
obligation to speak of in this case. It seems that the "conditions" imposed by the donor and as
the word is used in the law of donations is confused with "conditions" as used in the law of
obligations. In his annotation of Article 764 of the Civil Code on Donations, Arturo M. Tolentino,
citing the well-known civilists such as Castan, Perez Gonzalez and Alguer, and Colin & Capitant,
states clearly the context within which the term "conditions" is used in the law of donations, to
wit:

Finally, since the questioned deed of donation herein is basically a gratuitous one, doubts
referring to incidental circumstances of a gratuitous contract should be resolved in favor of the
least transmission of rights and interests. 10 Records are clear and facts are undisputed that
since the execution of the deed of donation up to the time of filing of the instant action,
petitioner has failed to comply with its obligation as donee. Petitioner has slept on its obligation
for an unreasonable length of time. Hence, it is only just and equitable now to declare the
subject donation already ineffective and, for all purposes, revoked so that petitioner as donee
should now return the donated property to the heirs of the donor, private respondents herein,
by means of reconveyance.

The word "conditions" in this article does not refer to uncertain events on
which the birth or extinguishment of a juridical relation depends, but is used
in the vulgar sense of obligations or charges imposed by the donor on the
donee. It is used, not in its technical or strict legal sense, but in its broadest
sense. 1 (emphasis supplied)

WHEREFORE, the decision of the Regional Trial Court of Iloilo, Br. 34, of 31 May 1991 is
REINSTATED and AFFIRMED, and the decision of the Court of Appeals of 18 June 1993 is
accordingly MODIFIED. Consequently, petitioner is directed to reconvey to private respondents
Lot No. 3174-B-1 of the subdivision plan Psd-1144 covered by Transfer Certificate of Title No. T3910-A within thirty (30) days from the finality of this judgment.

Clearly then, when the law and the deed of donation speaks of "conditions" of a donation, what
are referred to are actually the obligations, charges or burdens imposed by the donor upon the
donee and which would characterize the donation as onerous. In the present case, the donation
is, quite obviously, onerous, but it is more properly called a "modal donation." A modal donation

Costs against petitioner.

15

is one in which the donor imposes a prestation upon the donee. The establishment of the
medical college as the condition of the donation in the present case is one such prestation.

the donee was not meant to and does not have absolute control over the time within which it
will perform its obligations. It must still do so within a reasonable time. What that reasonable
time is, under the circumstances, for the courts to determine. Thus, the mere fact that there is
no time fixed as to when the conditions of the donation are to be fulfilled does not ipso facto
mean that the statute of limitations will not apply anymore and the action to revoke the
donation becomes imprescriptible.

The conditions imposed by the donor Don Ramon Lopez determines neither the existence nor
the extinguishment of the obligations of the donor and the donee with respect to the donation.
In fact, the conditions imposed by Don Ramon Lopez upon the donee are the very obligations of
the donation to build the medical college and use the property for the purposes specified in
the deed of donation. It is very clear that those obligations are unconditional, the fulfillment,
performance, existence or extinguishment of which is not dependent on any future or uncertain
event or past and unknown event, as the Civil Code would define a conditional obligation. 2

Admittedly, the donation now in question is an onerous donation and is governed by the law on
contracts (Article 733) and the case of Osmea, being one involving a contract, may apply. But
we must not lose sight of the fact that it is still a donation for which this Court itself applied the
pertinent law to resolve situations such as this. That the action to revoke the donation can still
prescribe has been the pronouncement of this Court as early as 1926 in the case of Parks which,
on this point, finds relevance in this case. There, this Court said,

Reliance on the case of Parks vs. Province of Tarlac 3 as cited on page 5 of the majority opinion
is erroneous in so far as the latter stated that the condition in Parks is a resolutory one and
applied this to the present case. A more careful reading of this Court's decision would reveal
that nowhere did we say, whether explicitly or impliedly, that the donation in that case, which
also has a condition imposed to build a school and a public park upon the property donated, is a
resolutory condition. 4 It is incorrect to say that the "conditions" of the donation there or in the
present case are resolutory conditions because, applying Article 1181 of the Civil Code, that
would mean that upon fulfillment of the conditions, the rights already acquired will be
extinguished. Obviously, that could not have been the intention of the parties.

[that] this action [for the revocation of the donation] is prescriptible, there
is no doubt. There is no legal provision which excludes this class of action
from the statute of limitations. And not only this, the law itself recognizes
the prescriptibility of the action for the revocation of a donation, providing a
special period of [four] years for the revocation by the subsequent birth of
children [Art. 646, now Art. 763], and . . . by reason of ingratitude. If no
special period is provided for the prescription of the action for revocation for
noncompliance of the conditions of the donation [Art. 647, now Art. 764], it
is because in this respect the donation is considered onerous and is
governed by the law of contracts and the general rules of prescription. 7

What the majority opinion probably had in mind was that the conditions are resolutory because
if they are not complied with, the rights of the donee as such will be extinguished and the
donation will be revoked. To my mind, though, it is more accurate to state that the conditions
here are not resolutory conditions but, for the reasons stated above, are the obligations
imposed by the donor.

More recently, in De Luna v. Abrigo, 8 this Court reiterated the ruling in Parks and said that:

Third, I cannot subscribe to the view that the provisions of Article 1197 cannot be applied here.
The conditions/obligations imposed by the donor herein are subject to a period. I draw this
conclusion based on our previous ruling which, although made almost 90 years ago, still finds
application in the present case. In Barretto vs. City of Manila, 5 we said that when the contract
of donation, as the one involved therein, has no fixed period in which the condition should be
fulfilled, the provisions of what is now Article 1197 (then Article 1128) are applicable and it is
the duty of the court to fix a suitable time for its fulfillment. Indeed, from the nature and
circumstances of the conditions/obligations of the present donation, it can be inferred that a
period was contemplated by the donor. Don Ramon Lopez could not have intended his property
to remain idle for a long period of time when in fact, he specifically burdened the donee with
the obligation to set up a medical college therein and thus put his property to good use. There is
a need to fix the duration of the time within which the conditions imposed are to be fulfilled.

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.
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.
The law applied in both cases is Article 1144(1). It refers to the prescription of an action upon a
written contract, which is what the deed of an onerous donation is. The prescriptive period is
ten years from the time the cause of action accrues, and that is, from the expiration of the time
within which the donee must comply with the conditions/obligations of the donation. As to when
this exactly is remains to be determined, and that is for the courts to do as reposed upon them
by Article 1197.

It is also important to fix the duration or period for the performance of the
conditions/obligations in the donation in resolving the petitioner's claim that prescription has
already barred the present action. I disagree once more with the ruling of the majority that the
action of the petitioners is not barred by the statute of limitations. There is misplaced reliance
again on a previous decision of this Court in Osmea vs. Rama. 6 That case does not speak of a
deed of donation as erroneously quoted and cited by the majority opinion. It speaks of a
contract for a sum of money where the debtor herself imposed a condition which will determine
when she will fulfill her obligation to pay the creditor, thus, making the fulfillment of her
obligation dependent upon her will. What we have here, however, is not a contract for a sum of
money but a donation where the donee has not imposed any conditions on the fulfillment of its
obligations. Although it is admitted that the fulfillment of the conditions/obligations of the
present donation may be dependent on the will of the donee as to when it will comply
therewith, this did not arise out of a condition which the donee itself imposed. It is believed that

For the reasons expressed above, I register my dissent. Accordingly, the decision of the Court of
Appeals must be upheld, except its ruling that the conditions of the donation are resolutory.

Padilla, J., dissents

16

G.R. No. 112796 March 5, 1998

property by a Deed of Assignment from a transferee of plaintiff-appellee's

grandmother.

TITO R. LAGAZO, petitioner, vs. COURT OF APPEALS and ALFREDO CABANLIT,

respondents.

The evidence for plaintiff-appellee [herein petitioner] is summarized as follows:

PANGANIBAN, J.:

Catalina Jacob Vda. de Reyes, a widow and grandmother of plaintiff-appellee, was

awarded in July 1975 a 60.10-square meter lot which is a portion of the Monserrat
Estate, more particularly described as Lot 8W, Block 6 of Psd-135834, located at 3320
2nd St., V. Mapa, Old Sta. Mesa, Manila. The Monserrat Estate is a public land owned
by the City of Manila and distributed for sale to bona fide tenants under its land-forthe-landless program. Catalina Jacob constructed a house on the lot.

Where the acceptance of a donation was made in a separate instrument but not formally
communicated to the donor, may the donation be nonetheless considered complete, valid and
subsisting? Where, the deed of donation did not expressly impose any burden the expressed
consideration being purely one of liberality and generosity a separate but the recipient
actually paid charges imposed on the property like land taxes and installment arrearages, may
the donation be deemed onerous and thus governed by the law on ordinary contracts?

On October 3, 1977, or shortly before she left for Canada where she is now a
permanent resident, Catalina Jacob executed a special power of attorney (Exh. "A") in
favor of her son-in-law Eduardo B. Espaol authorizing him to execute all documents
necessary for the final adjudication of her claim as awardee of the lot.

The Case
The Court answers these questions in the negative as it resolves this petition for review under
Rule 45 of the Rules of Court seeking to set aside the Decision1 of the Court of Appeals2 in CAGR CV No. 38050 promulgated on November 29, 1993. The assailed Decision reversed the
Regional Trial Court, Branch 30, Manila, in Civil Case No. 87-39133 which had disposed3 of the
controversy in favor of herein petitioner in the following manner:4

Due to the failure of Eduardo B. Espaol to accomplish the purpose of the power of
attorney granted to him, Catalina Jacob revoked said authority in an instrument
executed in Canada on April 16, 1984 (Exh. "D"). Simultaneous with the revocation,
Catalina Jacob executed another power of attorney of the same tenor in favor
plaintiff-appellee.

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendant as follows:

On January 30, 1985, Catalina Jacob executed in Canada a Deed of Donation over a
Lot 8W in favor of plaintiff-appellee (Exh. "E"). Following the donation, plaintiffappellee checked with the Register of Deeds and found out that the property was in
the delinquent list, so that he paid the installments in arrears and the remaining
balance on the lot (Exhs. "F", "F-1" and "F-2") and declared the said property in the
name of Catalina Jacob (Exhs. "G", "G-1", "G-2" and "G-3").

1. Ordering the defendant, or any person claiming rights under him, to surrender to
plaintiff possession of the premises known as Lot 8w, Block 6, Psd-135534 of the
Monserrat Estate, and the improvement standing thereon, located at 3320 2nd St., V.
Mapa, Old Sta. Mesa, Manila;

On January 29, 1986, plaintiff-appellee sent a demand letter to defendant-appellant

asking him to vacate the premises (Exh. "H"). A similar letter was sent by plaintiffappellee's counsel to defendant on September 11, 1986 (Exh. "I"). However,
defendant-appellant refused to vacate the premises claiming ownership thereof.
Hence, plaintiff-appellee instituted the complaint for recovery of possession and
damages against defendant-appellant.

2. Ordering the defendant to pay plaintiff the sum of Five Thousand (P5,000.00)
Pesos, as and for attorney's fees; and
3. Costs against the defendant.
The defendant's counterclaims are hereby dismissed.

Opposing plaintiff-appellee's version, defendant-appellant claimed that the house and

lot in controversy were his by virtue of the following documents:

The Facts

1. Deed of Absolute Sale executed by Catalina Jacob dated October 7, 1977 in favor
of Eduardo B. Espaol covering the residential house located at the premises (Exh.
"4").

Although the legal conclusions and dispositions of the trial and the appellate courts are
conflicting, the factual antecedents of the case are not substantially disputed.5 We reproduce
their narration from the assailed Decision:

2. Deed of Assignment over Lot 8W executed by Catalina Jacob in favor of Eduardo

Espaol dated September 30, 1980 (Exh. "5"); and

Civil Case No. 83-39133 involves an action filed by plaintiff-appellee [herein petitioner]
on January 22, 1987 seeking to recover from defendant-appellant [a] parcel of land
which the former claims to have acquired from his grandmother by donation.
Defendant-appellant [herein private respondent], on the other hand, put up the
defense that when the alleged donation was executed, he had already acquired the

3. Deed of Assignment executed by Eduardo B. Espaol over Lot 8W and a residential

house thereon in favor of defendant-appellant dated October 2, 1982 (Exh. "6").

17

After trial, the lower court decided in favor of plaintiff-appellee and against defendantappellant, rationalizing that the version of the former is more credible than that of the
latter. According to the lower court:

[II.] Even granting the correctness of the decision of the Court of Appeals, certain fact and
circumstances transpired in the meantime which would render said decision manifestly unjust,
unfair and inequitable to petitioner.

From the oral and documentary evidence adduced by the parties[,] it

appears that the plaintiff- has a better right over the property, subject
matter of the case. The version of the plaintiff is more credible than that of
the defendant. The theory of the plaintiff is that the house and lot belong to
him by virtue of the Deed of Donation in his favor executed by his
grandmother Mrs. Jacob Vda. de Reyes, the real awardee of the lot in
question. The defendant's theory is that he is the owner thereof because he
bought the house and lot from Eduardo Espaol, after the latter had shown
and given to him Exhibits 1, 4 and 5. He admitted that he signed the Deed
of Assignment in favor of Eduardo Espaol on September 30, 1980, but did
not see awardee Catalina Jacob Vda. de Reyes signed [sic] it. In fact, the
acknowledgement in Exhibit "5" shows that the assignor/awardee did not
appear before the notary public. It may be noted that on said date, the
original awardee of the lot was no longer in the Philippines, as both parties
admitted that she had not come back to the Philippines since 1977. (Exhs.
K, K-1). Defendant, claiming to be the owner of the lot, unbelievably did not
take any action to have the said house and lot be registered or had them
declared in his own name. Even his Exhibit 7 was not mailed or served to
the addressee. Such attitude and laxity is very unnatural for a buyer/owner
of a property, in stark contrast of [sic] the interest shown by the plaintiff
who saw to it that the lot was removed from the delinquent list for nonpayment of installments and taxes due thereto [sic].6

We believe that the resolution of this case hinges on the issue of whether the donation was
simple or onerous.

The Court's Ruling

The petition lacks merit.

Main Issue:
Simple or Onerous Donation?
At the outset, let us differentiate between a simple donation and an onerous one. A simple or
pure donation is one whose cause is pure liberality (no strings attached), while an onerous
donation is one which is subject to burdens, charges or future services equal to or more in value
than the thing donated. 10 Under Article 733 of the Civil Code, donations with an onerous cause
shall be governed by the rules on contracts; hence, the formalities required for a valid simple
donation are not applicable.
Petitioner contends that the burdens, charges or conditions imposed upon a donation need not
be stated on the deed of donation itself. Thus, although the deed did not categorically impose
any charge, burden or condition to be satisfied by him, the donation was onerous since he in
fact and in reality paid for the installments in arrears and for the remaining balance of the lot in
question. Being an onerous donation, his acceptance thereof may be express or implied, as
provided under Art. 1320 of the Civil Code, and need not comply with the formalities required by
Art. 749 of the same code. His payment of the arrearages and balance and his assertion of his
right of possession against private respondent clearly indicate his acceptance of the donation.

Ruling of the Appellate Court

In reversing the trial court's decision,7 Respondent Court of Appeals anchored its ruling upon
the absence of any showing that petitioner accepted his grandmother's donation of the subject
land. Citing jurisprudence that the donee's failure to accept a donation whether in the same
deed of donation or in a separate instrument renders the donation null and void, Respondent
Court denied petitioner's claim of ownership over the disputed land. The appellate court also
struck down petitioner's contention that the formalities for a donation of real property should
not apply to his case since it was an onerous one he paid for the amortizations due on the
land before and after the execution of the deed of donation reasoning that the deed showed
no burden, charge or condition imposed upon the donee; thus, the payments made by petitioner
were his voluntary acts.

We rule that the donation was simple, not onerous. Even conceding that petitioner's full
payment of the purchase price of the lot might have been a burden to him, such payment was
not however imposed by the donor as a condition for the donation. Rather, the deed explicitly
stated:
That for and in consideration of the love and affection which the DONEE inspires in
the DONOR, and as an act of liberality and generosity and considering further that the
DONEE is a grandson of the DONOR, the DONOR hereby voluntarily and freely gives,
transfer[s] and conveys, by way of donation unto said DONEE, his heirs, executors,
administrators and assigns, all the right, title and interest which the said DONOR has
in the above described real property, together with all the buildings and
improvements found therein, free from all lines [sic] and encumbrances and charges
whatsoever; 11 [emphasis supplied]

Dissatisfied with the foregoing ruling, petitioner now seeks a favorable disposition from this
Court.8

Issues
Petitioner anchors his petition on the following grounds:9

It is clear that the donor did not have any intention to burden or charge petitioner as the donee.
The words in the deed are in fact typical of a pure donation. We agree with Respondent Court
that the payments made by petitioner were merely his voluntary acts. This much can be
gathered from his testimony in court, in which he never even claimed that a burden or charge
had been imposed by his grandmother.

[I.] In reversing the decision of the trial court, the Court of Appeals decided a question of
substance in a way not in accord with the law and applicable decisions of this Honorable Court.

ATTY FORONDA:
18

q After you have received this [sic] documents, the . . . revocation of power
of attorney and the Special Power of Attorney in your favor, what did you
do?

a I was able to pay that, sir.

q So, as of now, the amount in the City of Manila of the lot has already
been duly paid, is it not?

WITNESS:

a Yes, sir. 12

a I went here in City Hall and verif[ied] the status of the award of my
grandmother.

The payments even seem to have been made pursuant to the power of attorney 13
executed by Catalina Reyes in favor of petitioner, her grandson, authorizing him to
execute acts necessary for the fulfillment of her obligations. Nothing in the records
shows that such acts were meant to be a burden in the donation.

q When you say the award, are you referring to the award in particular [of
the] lot in favor of your grandmother?
a Yes, Sir.

As a pure or simple donation, the following provisions of the Civil Code are applicable:

q What was the result of your verification?

Art. 734. The donation is perfected from the moment the donor knows of the
acceptance by the donee.

a According to the person in the office, the papers of my grandmother is

[sic] includ[ed] in the dilinquent [sic] list.

Art. 746. Acceptance must be made during the lifetime of the donor and the donee.

q What did you do then when you found out that the lot was includ[ed] in
the dilinquent [sic] list?

Art. 749. In order that the donation of an immovable may be valid, it must be made in
a public instrument, specifying therein the property donated and the value of the
charges which the donee must satisfy.

a I talked to the person in charged [sic] in the office and I asked him what
to do so that the lot should not [be] included in the dilinquent [sic] list.

The acceptance may be made in the same deed of donation and in a separate public
document, but it shall not take effect unless it is done during the lifetime of the
donor.

ATTY. FORONDA:

If the acceptance is made in a separate instrument, the donor shall be notified thereof
in authentic form, and this step shall be noted in both instruments.

q And what was the anwer [sic] given to you to the inquiry which you
made?

In the words of the esteemed Mr. Justice Jose C. Vitug, 14 "Like any other contract, an
agreement of the parties is essential. The donation, following the theory of cognition (Article
1319, Civil Code), is perfected only upon the moment the donor knows of the acceptance by the
donee." Furthermore, "[i]f 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." 15

WITNESS:
a According to the person in the office, that I would pay the at least [sic]
one half of the installment in order to take [out] the document [from] the
delinquent list.

Acceptance of the donation by the donee is, therefore, indispensable; its absence makes the
donation null and void. 16 The perfection and the validity of a donation are well explained by
former Sen. Arturo M. Tolentino in this wise:

q And [were] you able to pay?

a I was able to pay, sir.

. . . 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. 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 must be noted in both
instruments (that containing the offer to donate and that showing the acceptance).
Then and only then is the donation perfected. If the instrument of donation has been
recorded in the registry of property, the instrument that shows the acceptance should

q What were you able to pay, one half of the balance or the entire amounts
[sic]?
a First, I paid the [sic] one half of the balance since the time the lot was
awarded to us.
q What about the remaining balance, were you able to pay it?
19

also be recorded. 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. 17

grandmother Catalina Jacob; that before the latter left for Canada in 1977, Eduardo
Espaol had already been living in the same house and continued to do so until 1982;
and that private respondent occupied the premises after Espaol left. 24 On the other
hand, private respondent testified that he bought the subject house and lot from
Eduardo Espaol in 1982, after which he and his family occupied the same; but
sometime in 1985, they had to leave the place due to a road-widening project which
reduced the house to "about three meters [in] length and one arm[']s width." 25

Exhibit E (the deed of donation) does not show any indication that petitioner-donee accepted
the gift. During the trial, he did not present any instrument evidencing such acceptance despite
the fact that private respondent already raised this allegation in his supplemental pleading 18 to
which petitioner raised no objection. It was only after the Court of Appeals had rendered its
decision, when petitioner came before this Court, that he submitted an affidavit 19 dated
August 28, 1990, manifesting that he "wholeheartedly accepted" the lot given to him by his
grandmother, Catalina Reyes. This is too late, because arguments, evidence, causes of action
and matters not raised in the trial court may no longer be raised on appeal. 20

Between the testimonies under oath of the contending parties and the report not subjected
to cross-examination which was prepared by the investigator who recommended the approval
of petitioner's request for transfer, it is the former to which the Court is inclined to give more
credence. The investigator's report must have been based on the misrepresentations of
petitioner who arrogated unto himself the prerogatives of both Espaol and private respondent.
Further, it is on record that petitioner had required private respondent to vacate the subject
premises before he instituted this complaint. This shows he was not in actual possession of the
property, contrary to the report of the investigator.

True, the acceptance of a donation may be made at any time during the lifetime of the donor.
And granting arguendo that such acceptance may still be admitted in evidence on appeal, there
is still need for proof that a formal notice of such acceptance was received by the donor and
noted in both the deed of donation and the separate instrument embodying the acceptance. At
the very least, this last legal requisite of annotation in both instruments of donation and
acceptance was not fulfilled by petitioner. For this reason, the subject lot cannot be adjudicated
to him.

Cabanlit's Claim of Ownership

Petitioner also assails Respondent Court's conclusion that it is unnecessary to pass upon private
respondent's claim over the property. Petitioner insists that the principal issue in the case, as
agreed upon by the parties during pretrial, is "who between the parties is the owner of the
house and lot in question."

Secondary Issue:
Supervening Events

In disposing of the principal issue of the right of petitioner over the subject property under the
deed of donation, we arrive at one definite conclusion: on the basis of the alleged donation,
petitioner cannot be considered the lawful owner of the subject property. This does not
necessarily mean, however, that private respondent is automatically the rightful owner.

Petitioner also contends that certain supervening events have transpired which render the
assailed Decision "manifestly unjust, unfair and inequitable" to him. The City of Manila has
granted his request for the transfer to his name of the lot originally awarded in favor of Catalina
Reyes. A deed of sale 21 covering the subject lot has in fact been executed between the City of
Manila, as the vendor; and petitioner, as the vendee. The corresponding certificate of title 22
has also been issued in petitioner's name.

In resolving private respondent's claim of ownership, the examination of the genuineness of the
documents (deeds of assignment over the lot between Catalina Reyes and Eduardo Espaol and
between Espaol and private respondent) upon which he asserts his right is necessary,
especially in light of petitioner's allegations of forgery. However, the respective assignors in both
documents are not parties to the instant case. Not having been impleaded in the trial court, they
had no participation whatsoever in the proceedings at bar. Elementary norms of fair play and
due process bar us from making any disposition which may affect their rights. Verily, there can
be no valid judgment for or against them. 26

A close perusal of the city government's resolution 23 granting petitioner's request reveals that
the request for and the grant of the transfer of the award were premised on the validity and
perfection of the deed of donation executed by the original awardee, petitioner's grandmother.
This is the same document upon which petitioner, as against private respondent, asserts his
right over the lot. But, as earlier discussed and ruled, this document has no force and effect
and, therefore, passes no title, right or interest.

Anyhow, since petitioner, who was the plaintiff below, failed to prove with clear and convincing
evidence his ownership claim over the subject property, the parties thus resume their status quo
ante. The trial court should have dismissed his complaint for his failure to prove a right superior
to that of private respondent, but without prejudice to any action that Catalina Reyes or
Eduardo Espaol or both may have against said private respondent. Stating this point otherwise,
we are not ruling in this case on the rights and obligations between, on the one hand, Catalina
Reyes, her assigns and/or representatives; and, on the other, Private Respondent Cabanlit.

Furthermore, the same resolution states:

WHEREAS, in a report submitted by Ms. [Menchu C.] Bello [, Special Investigator,] on
February 7, 1990, it is stated that . . . constructed on the lot is a make-shift structure
used for residential purposes by the proposed transferee Tito Lagazo and his family; .
. . and that constructed at Lot 8, Block 6, former Monserrat Estate is a make-shift
structure used as a dwelling place by Lagazo and family because the front portion of
their house which was constructed on a road lot was demolished, and the structure
was extended backward covering a portion of the old temporary road lot. . . .

Not having proven any right to a valid, just and demandable claim that compelled him to litigate
or to incur expenses in order to protect his interests by reason of an unjustified act or omission
of private respondent, petitioner cannot be awarded attorney's fees. 27

The above findings of the investigator are, however, directly contradictory to the
testimonies in court of petitioner himself and of private respondent. Petitioner claimed
the following: that the house constructed on the subject lot was owned by his

WHEREFORE, the petition is hereby DENIED and the assailed Decision is AFFIRMED. SO
ORDERED.
20

G.R. No. L-57455 January 18, 1990

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).

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.

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).

MEDIALDEA, J.:

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).

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.
The antecedent facts are as follows:

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.

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. 1-5775 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 non-compliance (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:

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.

xxx xxx xxx

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.

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.

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;

WHEREFORE, the instant complaint is hereby ordered DISMISSED.

No pronouncement as to costs.

. . . . (p. 23, Rollo)

SO ORDERED. (pp. 42-43, 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:

No motion for reconsideration was filed by petitioners.

On July 22, 1981, petitioners brought the instant petition for review with the following
assignments of error:

xxx xxx xxx.

21

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.

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).
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.

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.

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:

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).

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.

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 noncompliance 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.

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.
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.
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.

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.

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:

The petition is impressed with merit.

. . . 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

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,
22

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)

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:

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.

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).

SO ORDERED.

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.
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.
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.
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.
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
23

G.R. No. L-11240

December 18, 1957

plaintiff appellant; and (2) because the donation was tainted with illegal cause or consideration,
of which donor and donee were participants.

CONCHITA LIGUEZ, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, MARIA NGO VDA. DE LOPEZ, ET AL.,
respondents.

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.

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.

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 selfinterest 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.

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 BogacLinot, 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.

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.

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 recites
That 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")

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. 641-642), 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.

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 pro-Japanese.

. . . 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.

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.

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.

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

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
24

was an implied condition to the donation, and being unlawful, necessarily tainted the donation
itself.

Civil Code, shutting out from relief either of the two guilty parties to an illegal or
vicious contract.

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):

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.).

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:
(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;

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.

(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.

The rule was reaffirmed in Lima vs. Lini Chu Kao, 51 Phil. 477.

In our opinion, the Court of Appeals erred in applying to the present case the pari delicto rule.
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.

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.
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).

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:

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.".

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.

ART. 1415. The husband may dispose of the property of the conjugal partnership for
the purposes mentioned in Article 1409.)

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

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
25

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.

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.

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.lawphi1.net

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.
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:

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.)lawphi1.net

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.

"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.

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 pendens notice, that in this
case does not exist.

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.

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.

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
26

G.R. No. L-35648 February 27, 1987

(2) that the transaction took place during her mother's lifetime, her father having
predeceased the mother;

PERSHING TAN QUETO, petitioner, vs. COURT OF APPEALS, JUAN POMBUENA and
RESTITUTA TACALINAR GUANGCO DE POMBUENA, respondents.

(3) that the donation or sale was consummated while RESTITUTA was already
married to her husband Juan Pombuena (JUAN, for short);

RESOLUTION

(4) that on January 22, 1935, JUAN filed for himself and his supposed co-owner
RESTITUTA an application for a Torrens Title over the land;

PARAS, J.:

(5) that under date of November 22, 1938 a decision was promulgated in GLRC No.
1638 (Cadastral Case No. 12) pronouncing JUAN ('married to RESTITUTA') as the
owner of the land;

This is a Motion for Reconsideration of the decision dated May 16,1983 of this Court * in the
above-entitled case, asking for the reversal of said decision on the following grounds:
1. Decison erred in disregarding the fact that Lot No. 304-B was registered in the
name of the husband, Juan Pombuena, as per OCT. No. 0-1160 issued pursuant to
the November 22, 1938 Decision (Exhibit 3) of the Cadastral Court in Cadastral Case
No. 12, G.L.R.O. Cad. Rec. No. 1638, and that petitioner had the right to rely on said
OCT;

(6) that on September 22, 1949 a contract of lease over the lot was entered into
between Pershing Tan Queto (TAN QUETO, for short, the herein petitioner) and
RESTITUTA (with the consent of her husband JUAN) for a period of ten (10) years;
(7) that on December 27, 1960 RESTITUTA sued TAN QUETO for unlawful detainer
(the lease contract having expired) before the Municipal Court of Ozamis City;

2. The Decision erred in misinterpreting the admission in the Answer of petitioner to

the complaint in the unlawful detainer Case No. 448 (City Court of Ozamiz City) as his
admission that Lot 304-B is the paraphernal property of the wife, Restituta Tacalinar;

(8) that as a consequence of the cadastral case, an Original Certificate of Title (Exh.
10) was issued in JUAN's name ("married to RESTITUTA") on April 22, 1962;

3. The Decision erred in reforming the Contract of Sale (Exh. B) of Lot 304-B from
Basilides Tacalinar (mother) to the respondent, Restituta Tacalinar Guangco de
Pombuena, from a sale to a conveyance of the share of the wife Restituta Tacalinar
(daughter) in the future hereditary estate of her parents;

(9) that 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 an understanding (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 the house constructed thereon) previously owned (that is, before the
barter) by TAN QUETO;

4. The Decision erred in over-looking that the barter agreement is an onerous

contract of exchange, whereby private respondents-spouses received valuable
consideration, concessions and other benefits therefor and in concluding that 'the
barter agreement has no effect;

(10) that after the barter agreement dated October 10, 1962 between JUAN and TAN
QUETO, the latter constructed (See p. 257, Rollo, Vol. II) on the disputed land a
concrete building, without any objection on the part of RESTITUTA;

5. The Decision erred in disregarding the fact that petitioner constructed his concrete
building on Lot No. 304-B in good faith relying OCT No. 0-1160, after the dismissal of
the ejectment case and only after the execution of said barter agreement;

(11) that 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.

6. The Decision erred in confusing the conclusion of law that petitioner is a builder in
bad faith with a finding of fact. The rule is that questions of law are reviewable on
appeal or by certiorari. Moreover, the rule on finding of fact is subject to well-settled
exceptions. (pp. 257-258, Rollo)

The two principal issues are clearly the following:

(1) Is the questioned lot paraphernal or conjugal?

It wig be recalled that the undisputed relevant facts indicate:

(2) In having constructed the building on the lot, should TAN QUETO be regarded as a builder in
good faith (and hence entitled to reimbursement) or a builder in bad faith (with no right to
reimbursement)?

(1) that Restituta Tacalinar Guanaco de Pombuena (RESTITUTA, for short) received
the questioned lot (no. 304-B), of the Cadastre Survey of the Municipality of Centro,
Mizamis Occidental, either as a purported donation or by way of purchase on
(February 11, 1927) (with P50.00) as the alleged consideration thereof;

The finding by both the Court of First Instance and the Court of Appeals that the disputed lot is
paraphernal and that TAN QUETO is a builder in bad faith were regarded by Us in Our assailed
27

decision as findings of facts and thus ordinarily conclusive on Us. Assuming they are factual
findings, still if they are erroneous inferences from certain facts, they cannot bind this Court.

WHEREFORE, Our decision promulgated on May 16,1983 is hereby SET ASIDE, and a new one is
hereby rendered declaring the questioned lot together with the building thereone, as TAN
QUETO's exclusive property. No costs..

A second hard look at the circumstances of the case has constrained Us to rule as follows:

SO ORDERED.

(1) The land is conjugal, not paraphernal. How was ownership transferred, if at all, from her
mother to RESTITUTA? The oral donation of the lot cannot be a valid donation interviews
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 both JUAN and RESTITUTA by tradition (delivery) as a
consequence of the contract of sale (See Art. 712, Civil Code) with P50.00 (then a considerable
amount) as the cause or consideration of the transaction. 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). The contention that
the sale was fictitious or simulated (and therefore void) is bankrupt. Firstly, there was a valid
consideration therefor. Secondly, assuming that there had indeed been a simulation, the parties
thereto cannot use said simulation to prejudice a stranger to said stratagem (like petitioner
herein).
One nagging question has been posed. But did not TAN QUETO admit in his Answer that
RESTITUTA was the owner of the lot. This is not so. He admitted RESTITUTA was an owner"
(not the owner) of the lot, and this is true, for she was a co-owner (with JUAN, and therefore
"an owner. " Surely, there is no admission of RESTITUTA's exclusive ownership. And yet this is
the basis of the trial court's conclusion that the lot was indeed paraphernal.
(2) Was Tan Queto a possessor and builder in good faith or in bad faith?
Even assuming that despite registration of the lot as conjugal, Tan Queto nursed the belief that
the lot was actually RESTITUTA's (making him in bad faith), still RESTITUTA's failure to prohibit
him from building despite her knowledge that construction was actually being done, makes her
also in bad faith. The net resultant of mutual bad faith would entitle TAN QUETO to the rights of
a builder in good faith (Art. 448, Civil Code), ergo, reimbursement should be given him if
RESTITUTA decides to appropriate the building for herself (Art. 448, Civil Code).
However, as already previously intimated, TAN QUETO having bartered his own lot and small
house with the questioned lot with JUAN (who has been adverted to by a court decision and by
the OCT a conjugal owner) may be said to be the OWNER-POSSESSOR of the lot. Certainly he is
not merely a possessor or builder in good faith (this phrase presupposes ownership in another);
much less is he a builder in bad faith. He is a builder-possessor jus possidendi because he is the
OWNER himself. Please note that the Chapter on Possession (jus possesionis, not jus
possidendi) in the Civil Code refers to a possessor other than the owner. Please note further
that the difference between a builder (or possessor) in good faith and one in bad faith is that
the former is NOT AWARE of the defect or flaw in his title or mode of acquisition while the latter
is AWARE of such defect or flaw (Art. 526, Civil Code). But in either case there is a flaw or
defect. In the case of TAN QUETO there is no such flaw or defect because it is he himself (not
somebody else) who is the owner of the property.

28

G.R. No. 72908 August 11, 1989

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.

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.

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.

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.

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.
That whereas, Salud Suterio de Matias, to whom this property is donated extrajudicially as agreed upon by both heirs, shall assume the said obligation to the
Philippine National Bank, Tayabas Branch.

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." 1 In it
they disposed of the said property as follows:

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.

EXTRA-JUDICIAL SETTLEMENT OF THE ESTATE OF DECEASED PERFECTA BALANE DE

CORDERO.

And the donee does hereby accept this donation and does hereby express her
gratitutde for the kindness and liberality of the donor.

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.

IN WITNESS WHEREOF, we have hereunto set our hands tills 20th day of May, 1946.
(Sgd.) FELIPE BALANE FELIPE BALANE

WITNESSETH:
(Sgd.) JUANA BALANE DE SUTERIO JUANA BALANE DE SUTERIO
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;

(Acknowledgment)
On June 20, 1946, Salud Suterio executed the following public instrument, 2 petitioner
Eufemia Pajarillo was one of the witnesses:

That whereas, the said Perfects Balane de Cordero, deceased, left property described
as follows:

KNOW ALL MEN BY THESE PRESENTS:

TRANSFER CERTIFICATE OF TITLE NO. 4671.

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.

Province of Tayabas.
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,

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.
29

IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of June, 1946.

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.

(Sgd.) SALUD SUTERIO DE MATIAS

SUTERIO DE MATIAS

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.

Donee
Signed in the presence of
(Sgd.) SOFRONIO BALANE
(Sgd.) EUFEMIA P. SUTERIO

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.

(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. 3 Salud 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. 4 It has also not been controverted that Salud
paid the P1,000.00 loan for which the land was mortgaged.

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.

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 . 5 On May 25, 1956, Juana
executed a deed of absolute sale conveying the land to Claudio for the declared consideration of
P12,000.00. 6 Two 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. 7

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.

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 . 8

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:

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. 9 For 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.
10

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.
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.

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

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.
30

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.

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.

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 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.

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.

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. 13 Given 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.

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. 17
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.

The cases cited by the parties in their respective memoranda are not really in point. In Legasto
v. Verzosa, 14 there 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,
15 where Justice Torres noted that the acceptance of the donation did not appear in the deed of
donation or in any other instrument.
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:

It is natural, even among non-relatives, to seek a non-judicial settlement through extra-legal

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.
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

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

31

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.

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.

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. 18 When
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:

WHEREFORE, the petition is DENIED, with costs against the petitioners. It is so ordered.

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.
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
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.
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:
Where the action is one for reconveyance based on constructive trust, a ten-year period is
allowed. 20
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
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
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.
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
32

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

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.

EDUVIGIS J. CRUZ, petitioner, vs. COURT OF APPEALS, ET AL., respondents.

PLANA, J.:

(b) Eduvigis Cruz owns another lot in Dolores Taytay Rizal, although the subject of a pending
litigation valued at P273,420.00 in 1977.

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.

(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. One-half
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.

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.

(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.

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

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.

(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
(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:

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 plaintiffdonor, who must allege and establish the requirements prescribed by law, on the basis of which
annulment or reduction of the donation can be adjudged.

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:

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.

xxx xxx xxx

(3) If the donor should subsequently adopt a minor child.

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 one-half 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.

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.

WHEREFORE, the decision under review is affirmed.

On appeal, the Court of Appeals reversed the trial court and dismissed the complaint. It found
that.

SO ORDERED.

33

34

G.R. No. 77425

June 19, 1991

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.

THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP

OF IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners,
vs.
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

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.

June 19, 1991

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.

THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP

OF IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners,
vs.
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.

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.

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.

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

REGALADO, J.:

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

These two petitions for review on certiorari1 seek to overturn the decision of the Court of
Appeals in CA-G.R. CV No. 054562 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 petitioner's motions for the reconsideration of its aforesaid decision.

On December 23, 1986, respondent Court of Appeals, holding that the action has not yet
prescibed, rendered a decision in favor of private respondents, with the following dispositive
portion:

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

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

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.

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 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 donee's heirs.

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

We do not agree.
35

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:

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.

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

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.

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

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.

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.

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.

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. vs. 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 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.

Certain provisions of the Civil Code illustrative of the aforesaid policy may be considered
applicable by analogy.1wphi1 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.
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.

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.14
36

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 d 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 petitioner's 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: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 case.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.

37

G.R. No. 105944

February 9, 1996

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, I and 3-F) and to cancel TCT Nos. T-24444, 24445 and T-27434.

SPOUSES ROMULO AND SALLY EDUARTE, petitioners, vs. THE HONORABLE COURT OF
APPEALS and PEDRO CALAPINE (substituted by ALEXANDER CALAPINE and
ARTEMIS CALAPINE), respondents.

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 plaintiff's 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 attorney's fees;
and that upon their cross-claim the defendant Helen S. Doria be ordered to reimburse
them the purchase price of P110,000 and to pay them moral and exemplary damages
and attorney's fees (pp. 23-31, rec.).

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 one's 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 CAG.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.

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.

As set out in the appealed decision, the undisputed facts are as follows:
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 InterVivos)" ceding one-half portion thereof
to his niece Helen S. Doria (Exhibit B).

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:

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. P-2129 (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).

WHEREFORE, premises considered, judgment is hereby rendered by the

Court in the instant case in favor of plaintiff and against defendant Eduartes
to wit:
1. DECLARING as it is hereby declared, the revocation of the Deed of
Donation dated April 26, 1984;

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).

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;

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 vendor's 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).

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. P2129 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

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
38

4. ORDERING defendant Helen Doria to pay substitute-plaintiffs the sum of

P20,000.00 as and for attorney's fees.

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.

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 attorney's fees.

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.

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 crossclaim (pp. 11-12, decision, pp. 264-265, rec.).

In support of this contention, petitioners cite the following portions found in Tolentino's
Commentaries and Jurisprudence on the Civil Code:

Only the defendants Eduarte spouses took an appeal (p. 266, rec.), claiming that the
trial court erred -

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

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;

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:

(c) TCT No. T-27434 (Exhibit 4) issued in the name of spouses

Romulo Eduarte and Sally Eduarte; and

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 175176].5 (Emphasis supplied).

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

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

4. In finding that the signature of Pedro Calapine in the deed of donation (Exhibits C
and 1-A) dated July 26, 1984 a forgery based on the opposite findings of the
handwriting 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 Calapine's signature in the second
deed of donation to be a forgery. It also ruled that by falsifying Pedro Calapine's 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 court's finding that petitioners are not buyers in good faith of

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 Calapine's
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.

39

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.

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 gauging the relative weight to be given to the opinion of handwriting experts, we adhere to
the following standards:

In adjudging petitioners as buyers in bad faith, respondent Court of Appeals affirmed the trial
court's 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 court's 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 Doria's name.

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

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:

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:

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.

The Court is not convinced with Cruz's 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", "S10" 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).

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 latter's name. And although Helen Doria's 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 fade 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

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 Albacea's proved
to be complete, thorough and scientific and is worthy of credence and belief.8

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

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.

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
40

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 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.
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:
xxx

xxx

xxx

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. T27434 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-plaintiff Alexander and Artemis both surnamed Calapine, after
payment of the corresponding fees and taxes therefor; and
xxx

xxx

xxx

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, . . . .
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.

41

G.R. No. 132681

December 3, 2001

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.

RICKY Q. QUILALA, petitioner, vs. GLICERIA ALCANTARA, LEONORA ALCANTARA,

INES REYES and JOSE REYES, respondent.

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.

YNARES-SANTIAGO, J.:

Meanwhile, respondents Gliceria Alcantara, Leonora Alcantara, Ines Reyes and Juan Reyes,
claiming to be Catalina's 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 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.

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 "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:
REPUBLIC OF THE PHILIPPINES )
QUEZON CITY

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 Catalina's SSS records does it
appear that Violeta was Catalina's 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:

) 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.

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:

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.

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.);

In witness whereof, I have hereunto set my hand, in the City of Quezon, Philippines,
this 20th day of Feb., 1981.

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;.

(SGD.) NOTARY PUBLIC

Until December 31, 1981
(illegible)

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

DOC NO. 22;

4. Dismissing the counterclaim of defendant Ricky A. Quilala.
PAGE NO. 6;
No costs.
BOOK NO. XV;
SO ORDERED.3
SERIES OF 1981.
42

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 Catalina's
alleged last will and testament.4

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:

WHEREFORE, the appealed decision is hereby AFFIRMED with the following

MODIFICATION:

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,

(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.

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

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:
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 COURT'S RULING
THAT VIOLETA QUILALA IS NOT THE DAUGHTER OF CATALINA QUILALA.6

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." (italics supplied).

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

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.

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

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.

The donee's acceptance of the donation was explicitly manifested in the penultimate paragraph
of the deed, which reads:
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 Violeta's failure to acknowledge

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
43

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 donor's 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 donor's
intention.21
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.

44

G.R. No. 107132 October 8, 1999

(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

MAXIMA HEMEDES, petitioner,vs. THE HONORABLE COURT OF APPEALS, DOMINIUM

REALTY AND CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES and R & B
INSURANCE CORPORATION, respondents.

(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.

G.R. No. 108472 October 8, 1999

R & B INSURANCE CORPORATION, petitioner, vs. THE HONORABLE COURT OF
APPEALS, DOMINIUM REALTY AND CONSTRUCTION CORPORATION, ENRIQUE D.
HEMEDES and MAXIMA HEMEDES, respondents.

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.

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 Corporation's (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:

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. (0941) 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."
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

(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 above mentioned, 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

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.

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:

45

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.

a new transfer certificate of title in the name of Dominium Realty and Construction
Corporation. No pronouncement as to costs and attorney's fees. 8
Both R & B Insurance and Maxima Hemedes appealed from the trial court's decision. On
September 11, 1992 the Court of Appeals affirmed the assailed decision in toto and on
December 29, 1992, it denied R & B Insurance's 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.

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 Brewery's 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.1wphi1.nt

In G.R. No. 107132 9, petitioner Maxima Hemedes makes the following assignment of errors as
regards public respondent's ruling
I.

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. (0-941) 0198 and that, as such, she has the right to appropriate Asia Brewery's 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.

II.

III.

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.

IV.
V.
VI.
VII.

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:
(a) Declaring Transfer Certificate of Title No. 41985 of the Register of Deeds of
Laguna null and void and ineffective;

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.
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.
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING RESPONDENTS
ENRIQUE AND DOMINIUM IN BAD FAITH.
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.
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO LOAN WAS
OBTAINED BY PETITIONER MAXIMA HEMEDES FROM RESPONDENT R & B
INSURANCE CORPORATION.
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.
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:

(b) Declaring Dominium Realty and Construction Corporation the absolute owner and
possessor of the parcel of land described in paragraph 3 of the complaint;

I.
II.

(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

III.

(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
46

RESPONDENT COURT ERRONEOUSLY ERRED IN APPLYING ARTICLE 1332 OF THE

CIVIL CODE.
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.
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

IV.
V.
VI.

(21) YEARS AFTER THE EXECUTION OF THE DEED OF CONVEYANCE IN FAVOR OF

MAXIMA.
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.
RESPONDENT COURT SERIOUSLY ERRED IN FINDING R & B AS A MORTGAGEE NOT
IN GOOD FAITH
RESPONDENT COURT SERIOUSLY ERRED IN NOT GRANTING THE DAMAGES PRAYED
FOR BY R & B IN ITS COUNTERCLAIM AND CROSSCLAIM. 12

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 Kausapin's 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 Kausapin's thumbmark necessarily leads one to conclude that she did in
fact affix her thumbmark upon the deed of donation in favor of her stepdaughter.

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.

Moreover, public respondent's reliance upon Justa Kausapin's 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 Kausapin's own testimony attests to this fact

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 court's 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

Atty. Conchu:
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.

Maxima Hemedes argues that Justa Kausapin's 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

(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:
Atty. Mora:
Now you said that Justa Kausapin has been receiving from you advances for food,
medicine & other personal or family needs?
E. Hemedes:
A: Yes.

Public respondent's 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

Q: Was this already the practice at the time this "Kasunduan" was executed?
A: No that was increased, no, no, after this document.
xxx xxx xxx
47

Q: And because of these accommodations that you have given to Justa Kausapin;
Justa Kausapin has in turn treated you very well because she's very grateful for that,
is it not?

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.1wphi1.nt
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.

A: I think that's human nature.

Q: Answer me categorically, Mr. Hemedes she's very grateful?
A: Yes she might be grateful but not very grateful.
(TSN, p. 34, June 15, 1984)

20

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 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.

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 wellestablished 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

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.

Finally, public respondent was in error when it sustained the trial court's 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:
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.

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

Art. 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

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

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

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
48

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. 34

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 inexistent. 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 mortgagor's title. We reiterate that at no point in time
could private respondents establish any rights or maintain any claim over the land.

R & B Insurance alleges that, contrary to public respondent's 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 buyer's 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

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.

We sustain petitioner R & B Insurance's 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 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

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
mortgagor's 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

As regards R & B Insurance's 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

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 property's 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

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 Insurance's claim for attorney's fees must also fail. The
award of attorney's fees is the exception rather than the rule and counsel's 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

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 respondent's ruling, for the reason that Maxima Hemedes' ownership over the property
49

conjecture. 53 Under the circumstances prevailing in the instant case, there is no factual or legal
basis for an award of attorney's fees.

view of its unique advantage of being able to observe at first-hand the demeanor and
deportment of witnesses, and especially when such findings of facts are affirmed by the Court of
Appeals, which is the final arbiter of questions of fact (People vs. Edao, 64 SCRA 675 [1975];
People vs. Tala, 141 SCRA 240; People vs. Canada and Dondoy, 144 SCRA 121 [1986]; People
vs. Clore, 184 SCRA 638 [1990]; Binalay vs. Manalo, 195 SCRA 374 [1991]; People vs. Miscala,
202 SCRA 26 [1991]; People vs. Lagrosa, 230 SCRA. 298 [1994]). All these conditions are
present in the case at bar, and I have grave reservations about the propriety of setting aside
time-tested principles in favor of a finding that hinges principally on the credibility of a single
witness, whom we are asked to disbelieve on the basis merely of her recorded testimony
without the benefit of the advantage that the trial court had, disregarding in the process
another long-established rule that mere relationship of a witness to a party does not discredit
his testimony in court (U.S. vs. Mante, 27 Phil 124; People vs. Pagaduan, 37 Phil 90; People vs.
Reyes, 69 SCRA 474 [1976]; People vs. Padiernos, 69 SCRA 484 [1976]; Borromeo vs. Court of
Appeals, 70 SCRA 329 [1976]; People vs. Estocada, 75 SCRA 295 [1977]; People vs. Ciria, 106
SCRA 381 [1981]; People vs. Ramo, 132 SCRA 174 [1984]; People vs. Atencio, 156 SCRA 242
[1987]; People vs. Gutierrez. Jr., 158 SCRA 614 [1988]; People vs. Bandoquillo, 167 SCRA 549
[1988]; People vs. Suitos, 220 SCRA 419 [1993]).

WHEREFORE, the assailed decision of public respondent and its resolution dated February 22,
1989 are REVERSED. We uphold petitioner R & B Insurance's 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.
Separate Opinions
VITUG, J., separate opinion;
I share the opinion expressed by my esteemed colleague, Mme. Justice Minerva P. GonzagaReyes, in her ponencia.

The primordial issue is whether or not the "Deed of Conveyance of Unregistered Real Property
by Reversion" dated September 27, 1960 conveying the subject property to Maxima Hemedes is
valid. If the transfer is not valid, no title passed to her successor-in-interest, R & B Insurance
Corporation.

I just would like to add that a donation would not be legally feasible if the donor has neither
ownership nor real right that he can transmit to the donee. Unlike an ordinary contract, a
donation, under Article 712, in relation to Article 725, of the Civil Code is also a mode of
acquiring and transmitting ownership and other real rights by an act of liberality whereby a
person disposes gratuitously that ownership or real right in favor of another who accepts it. It
would be an inefficacious process if the donor would have nothing to convey at the time it is
made.

The Court of Appeals, confirming and summarizing the findings of fact and law made by the trial
court, declared:
We sustain the findings of the trial court.

Art. 744 of the Civil Code states that the "donation of the same thing to two or more different
donees shall be governed by the provisions concerning the sale of the same thing to two or
more persons," i.e., by Article 1544 of the same Code, as if so saying that there can be a case
of "double donations" to different donees with opposing interest. Article 744 is a new provision,
having no counterpart in the old Civil Code, that must have been added unguardedly. Being a
mode of acquiring and transmitting ownership or other real rights, a donation once perfected
would deny the valid execution of a subsequent inconsistent donation (unless perhaps if the
prior donation has provided a suspensive condition which still pends when the later donation is
made).

To begin with, the "Deed of Conveyance of Unregistered Real Property by Reversion"

was nullified by the trial court on two (2) grounds:

First, MAXIMA failed to comply with the requirements laid down by Article 1332 of the
Civil Code. Said provision reads:
Art. 1332. 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.

In sales, Article 1544, providing for the rules to resolve the conflicting rights of two or more
buyers, is appropriate since the law does not prohibit but, in fact, sanctions the perfection of a
sale by a non-owner, such as the sale of future things or a short sale, for it is only at the
consummation stage of the sale, i.e., delivery of the thing sold, that ownership would be
deemed transmitted to the buyer. In the meanwhile, a subsequent sale to another of the same
thing by the same seller can still be a legal possibility. This rule on double sales finds no
relevance in an ordinary donation where the law requires the donor to have ownership of the
thing or the real right he donates at the time of its perfection (see Article 750, Civil Code) since
a donation constitutes a mode, not just a title, in an acquisition and transmission of ownership.

In her testimony, MAXIMA admitted the entire document was written in English, a
language not known to Justa Kausapin (TSN, 17 November 1981, pp. 7-8; Deposition
of Justa Kausapin). Yet, MAXIMA failed to introduce sufficient evidence that would
purportedly show that the deed of conveyance was explained to Justa Kausapin
before the latter allegedly affixed her thumbmark. On the contrary, she admitted
having failed to translate the deed of conveyance to Justa Kausapin because
according to her, the latter has "no voice" anyway insofar as the property is
concerned. Her testimony reads:

MELO, J., dissenting opinion;

Q In connection with this deed of conveyance which has been marked as

Exh. "2-Maxima," we note that this is written in English, do you know, Mrs.
Hernandez (MAXIMA), whether this document was ever translated to Justa
Kausapin?

I find myself unable to join the majority. The opinion written by my esteemed colleague,
Madame Justice Minerva Gonzaga-Reyes, will have far-reaching ramifications on settled
doctrines concerning the finality and conclusiveness of the factual findings of the trial court in
50

A Justa Kausapin has no voice because that's the order of my

father, so anyway. . .

The majority would hold that the twin repudiations cannot be given credence because the
witness is biased in favor of Enrique Hemedes, who, by providing support and financial
assistance to the witness before, during and after the execution of the "Kasunduan," is said to
have influenced her into signing the same. This issue refers to the credibility of witnesses which,
as stated earlier, is best left for determination by the trial court (People vs. Oliano, 287 SCRA
158 [1998], citing People vs. Pontillar, Jr., 275 SCRA 338 [1997]; People vs. Rubio, 257 SCRA
528 [1996]; People vs. Del Prado, 253 SCRA 731 [1996]). I am not prepared to substitute my
judgment for that of the trial court on the credibility of Justa Kausapin on the basis alone of the
relationship between her and Enrique Hemedes. To reiterate, the rule is: "Mere relationship of a
witness to a party does not discredit his testimony in court." (U.S. vs. Mante, supra; Aznar vs.
Court of Appeals, 70 SCRA 329 [1976]; People vs. Letigio, 268 SCRA 227, 243 [1997]).

Court Answer the question, you were only asked whether that
was translated.
A No. (TSN 26 November, 1984, pp. 36-37, Maxima Hemedes).

Second, MAXIMA failed to repudiate the allegation of Justa Kausapin disclaiming

knowledge of her having executed such a deed. As a matter of fact, Justa Kausapin
claimed that it was only during the hearing conducted on 07 December 1981 that she
first caught glimpse of the deed of conveyance (TSN, 07 December 1981, pp. 22-23,
ibid.) She therefore could not have possibly affixed her thumbmark therein. In the
light of such a denial, the burden of proving that the deed of conveyance was indeed
genuine laid on MAXIMA. After all, any party who asserts the affirmative of the issue
has the burden of presenting evidence required to obtain a favorable judgment
(Republic v. Court of Appeals, 182 SCRA 290).1wphi1.nt

I cannot infer from the mere circumstance that Justa Kausapin was receiving support and
sustenance from Enrique Hemedes that she had any improper motives to testify in favor of
Enrique and against Maxima. It must be remembered that Justa Kausapin had a legal right to
such financial assistance, not only from respondent Enrique Hemedes, but also from Maxima
Hemedes, who are both her stepchildren. If one must impute improper motives in favor of
Enrique, one could just as easily ascribe these to Maxima. Furthermore, it must be noted that
Justa Kausapin's entitlement to support flowed from her usufructuary rights contained in the
"Donation Inter Vivos with Resolutory Conditions" executed by her late husband, Jose Hemedes,
the common father of petitioner Maxima and respondent Enrique Hemedes. In supporting his
stepmother, Enrique was, therefore, merely performing a legal or contractual duty in favor of
Justa Kausapin. There was nothing improper in Justa Kausapin's repudiation of the conveyance
in favor of Maxima, especially so if one considers the fact that the latter did not adduce any
other evidence to defeat the presumption that Justa Kausapin was stating the truth when she
said that she never conveyed the property to Justa Maxima. As the trial court found:

Instead, what was clearly established from the deposition of Justa Kausapin is the fact
that she never executed any document donating the property to anybody else except
ENRIQUE. This can be readily gleaned from her testimony, reading:
Q From the time, Aling Justa, that your husband Jose Hemedes donated
the property to you up to the time you in turn donated the same to Enrique
Hemedes in 1971, do you recall having executed any document donating
this particular property to anybody else?
A None, Sir. (TSN, 17 November 1981, p. 21)

. . . The actuation of Enrique Hemedes towards Justa Kausapin is legally and morally justified. It
must be remembered that Justa Kausapin is the stepmother of Enrique Hemedes; she was also
the usufructuary of the property in dispute. It is only natural and in keeping with law and
custom, or Filipino tradition, for a son to support his mother (even if she happens to be a
stepmother); and form a legal standpoint, the naked owner Enrique Hemedes was bound to
support Justa Kausapin by way of giving her what she was entitled to as usufructuary.

(pp. 63-64, Rollo.)

There is no dispute that Justa Kausapin twice repudiated the conveyance in favor of Maxima
Hemedes. As found by the trial court:
In an Affidavit dated April 10, 1981 executed by Justa Kausapin before three witnesses (Exh. DDominium), said affiant disowned the alleged "Deed of Conveyance of Unregistered Real
Property by Reversion" invoked by defendant Maxima Hemedes, and expressly stated that she
never granted any right over the property to Maxima Hemedes, whether as owner or mortgagor,
that she never allowed her to use the land as security or collateral for a loan. In the same
affidavit, Justa Kausapin affirmed the authenticity of the "Kasunduan" whereby she transferred
ownership of the disputed land to Enrique Hemedes, her stepson and reliable source of
assistance throughout the years that she was in need of help. The testimony of Justa Kausapin
was also taken by deposition on November 17, December 7 and 14, 1981 and on January 14,
1982, wherein all the contending parties were represented and had the opportunity to crossexamine her. In her testimony (the entire transcript of which has been submitted as Exh. KEnrique), Justa Kausapin reiterated her repudiation of the Deed of Conveyance in favor of
Maxima Hemedes and re-affirmed the validity of the "Kasunduan" in favor of Enrique Hemedes,
as well as the subsequent sale of the land by Enrique Hemedes to Dominium.

(p. 104, Rollo.)

The trial court's ruling on the invalidity of the title of Maxima is not based solely on Justa
Kausapin's repudiation of the deed of conveyance, but likewise on the very acts of Maxima and
her transferee R & B Surety and Insurance. The factual findings of the trial court are to the
effect that despite the alleged transfer of ownership from Justa Kausapin to Maxima Hemedes
on September 27, 1960 and the subsequent transfer to R & B Insurance on May 3, 1968 by way
of foreclosure and public auction sale, neither do these petitioners exercised their rights of
ownership over the disputed property, never even asserting their supposed ownership rights
until it was too late. The following findings of the trial court stand unassailed:
There are other indications which led this Court to believe that neither defendant Maxima
Hemedes nor defendant R & B INSURANCE consider themselves the owner of the property in
question. Both of these claimants never declared themselves as owners of the property for tax
purposes; much less did they pay a single centavo in real estate taxes. The argument that since

(pp. 83-84, Rollo.)

51

Justa Kausapin was in possession of the property as usufructuary she should pay the taxes
contravenes the clear provision of the Civil Code that the taxes which may be imposed directly
on the capital during the usufruct, in this case the realty taxes, shall be at the expense of the
owner (Article 597, Civil Code). If Maxima Hemedes and R & B INSURANCE were convinced that
they were the owners of the property, why did they not pay taxes for the same? This attitude is
not consistent with that of an owner in good faith. The Court has noted that the very owner of R
& B INSURANCE has admitted in her testimony that they declared the property as one of the
assets of R & B INSURANCE only in 1976, which is eight years after they supposedly bought it at
public auction in 1968 (TSN, July 6, 1987, pp. 22-23) (Decision, pp. 32-33).

Maxima Hemedes pledged to submit the document which will be compared with the specimen
thumbmark to be obtained from Justa Kausapin (TSN, December 7, 1981, p. 28). The records,
however, do not show that said counsel persisted in his request for comparison of Kausapin's
thumbmarks. If petitioners were convinced that the specimen thumbprint of Justa Kausapin was
of crucial importance to their cause, they should have insisted on presenting her as a witness
and, thereupon, obtaining her thumbprint. Their own failure to pursue the production of the
specimen thumbprint of Justa Kausapin negated any belated claim that the said specimen was
suppressed (People vs. Tulop, citing People vs. Pagal, 272 SCRA 443 [1998]; Commissioner of
Internal Revenue vs. Tokyo Shipping Company, Ltd., 244 SCRA 332 [1995]; citing Nicolas vs.
Nicolas, 52 Phil 265 [1928] and Ang Seng Quiem vs. Te Chico, 7 Phil 541 [1907]).1wphi1.nt

(pp. 101-102, Rollo.)

The two courts below were, to my mind, most perceptive when they held that proof of
authenticity of the thumbprint of Justa Kausapin would not render valid an otherwise void
document in light of the admission of Maxima Hemedes that she did not explain the English
contents thereof to Justa Kausapin in a language understood by her.

Faced with the categorical and straightforward repudiations of the conveyance supposedly made
in her favor, Maxima Hemedes could only gratuitously assert otherwise, as no other testimonial
or documentary evidence was adduced in support thereof. Maxima's self-serving assertions,
however, are legally infirm in view of her admission that the deed of conveyance in her favor
was written in a language unknown to the person who supposedly executed the same and the
terms thereof were not fully explained to the person who executed the same. These are the
facts as found by the trial court:

On the other hand, the validity of the conveyance to Enrique Hemedes is amply proven by the
evidence on record. Thus, largely uncontested are the following findings of fact of the trial
court:

Questioned about the execution of the "Deed of Conveyance of Unregistered Real Property by
Reversion" which is the basis of her claim, defendant Maxima Hemedes admitted that the
document which is in English was not translated or explained to Justa Kausapin before the latter
supposedly affixed her thumbmark to the document (TSN, November 26, 1984, p. 34; TSN,
December 10, 1984, p. 9). The Court has noted from the records that the Notary Public before
whom the said document was notarized was not presented as a wittiness by defendant Maxima
Hemedes, if only to attest to the execution of said document by Justa Kausapin, considering that
the latter is an illiterate when it comes to documents written in English. Maxima explained the
non-translation of the Deed of Conveyance into a language understood by Justa Kausapin with
the statement that the latter (Justa Kausapin) "has no voice" anyway in so far as the property is
concerned (TSN, November 26, 1984, p. 36) . . . the Notary Public before whom the said
document was supposed to have been axknowledged was also not presented as a witness, and
there was no explanation as to why he was not also presented. In the face of such an admission
and failure on the part of defendant Maxima Hemedes, coupled with the straightforward
repudiation by Justa Kausapin herself of the document relied upon by said defendant the Court
finds and so concludes that the "Deed of Conveyance of Unregistered Real Property by
Reversion" is not a credible and convincing evidence and is of no evidentiary value under the
law upon which claimant Maxima Hemedes may anchor a valid claim of ownership over the
property subject of this action.

Enough has already been said hereinabove concerning the claim of ownership of plaintiff
Enrique. From an overall evaluation of the facts found by the Court to be substantiated by the
evidence on record, the Court is convinced and so holds that the three conflicting claimants, it is
party plaintiffs, Enrique Hemedes and now DOMINIUM, who have both law and equity on their
side. Plaintiff Enrique Hemedes' title to the property in question by virtue of the "Kasunduan"
dated May 27, 1971 was confirmed twice by his grantor, Justa Kausapin; he complied with his
obligations as naked owner by giving Justa Kausapin her usufructuary rights in the form of
financial and other assistance; he declared his ownership of the property openly and adversely
to other claimants by recording the same in the appropriate government agencies, namely, the
Municipal and Provincial Assessor's Office, the Ministry of Agrarian Reform and the Bureau of
Lands; he was openly known in the community where the property is located as the owner
thereof; he paid the taxes on the property conscientiously from the time he acquired the same
to the time he sold the same to co-plaintiff DOMINIUM; he was in continuous possession of the
property during the said period; he paid the tenant, Nemesio Marquez, the disturbance fee
required under the Land Reform Law.
(pp., 102-103, Rollo.)
The Court of Appeals, therefore, did not err in holding that since the deed of conveyance to
Maxima was found to be spurious, it necessarily follows that OCT No. (0-941) 0-198 issued in
her name is null and void. This is because the registration will not invalidate a forged or invalid
document.

(pp. 91-93, Rollo.)

It is argued that private respondents failed to have the thumbmarks of Justa Kausapin
appearing on the deeds executed in favor of Maxima and Enrique compared and this failure may
be taken as wilful suppression of evidence that is presumed to be adverse if produced (Rules of
Court, Rule 131, Sec. 3(e). The applicability of this rule presupposes that the suppressed
evidence is not available to the other party for production in court (People vs. Padiernos, 69
SCRA 484 [1976]; People vs. Silvestre, 279 SCRA 474, 495 [1997]). This is not the case here for
the same documents were available to petitioners. In fact, the records show that counsel for

I, therefore, vote to dismiss the petition and to affirm the decision appealed from.

52

G.R. No. 134685 November 19, 1999

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
petitioner's and other creditors' prejudice; and that LIM, at the time of the fraudulent
conveyance, left no sufficient properties to pay her obligations.

MARIA ANTONIA SIGUAN, petitioner, vs. ROSA LIM, LINDE LIM, INGRID LIM and NEIL
LIM, respondents.
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 certiorari under Rule 45 of
the Revised Rules of Court.

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.

The relevant facts, as borne out of the records, are as follows:

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 attorney's fees; and P5,000 as expenses of litigation.

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 decision 1 dated 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.

On appeal, the Court of Appeals, in a decision 7 promulgated on 20 February 1998, reversed the
decision of the trial court and dismissed petitioner's 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.

It also appears that on 31 July 1990 LIM was convicted of estafa by the RTC of Quezon City in
Criminal Case No. Q-89-2216 2 filed by a certain Victoria Suarez. This decision was affirmed by
the Court of Appeals. On appeal, however, this Court, in a decision 3 promulgated on 7 April
1997, acquitted LIM but held her civilly liable in the amount of P169,000, as actual damages,
plus legal interest.

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 LIM's 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.

Meanwhile, on 2 July 1991, a Deed of Donation 4 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;

Anent petitioner's contention that assuming that the Deed of Donation was not antedated it was
nevertheless in fraud of creditors because Victoria Suarez became LIM's 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.

(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

Her motion for reconsideration having been denied, petitioner came to this Court and submits
the following issue:

(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.

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

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
53

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 LIM's judgment creditor before the execution of the Deed of
Donation.

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

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 30 10 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."

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 petitioner's 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.

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.

Petitioner's 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:

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, attorney's fees and expenses of litigation because there is no
factual basis therefor in the body of the trial court's decision.

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 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, attorney's fees and expenses of litigation are proper.

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:

We resolve these issues in the negative.

Sec. 19. Classes of docum/ents. For the purpose of their presentation in evidence,
documents are either public or private.

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.

Public documents are:

(a) . . .
(b) Documents acknowledged before a notary public except last wills and testaments.
...

Art. 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."

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.

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

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. Petitioner's 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.
54

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

Q These properties at the Sto. Nio Village, how much did you acquire this property?

The fourth requisite for an accion pauliana to prosper is not present either.

A That is P800,000.00 to P900,000.00.

Art. 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.

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.

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?

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.

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:

As earlier discussed, petitioner's 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) The fact that the consideration of the conveyance is fictitious or is inadequate;

(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;

(2) A transfer made by a debtor after suit has begun and while it is pending against
him;

23

(3) A sale upon credit by an insolvent debtor;

(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) 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;

(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

(6) The fact that the transfer is made between father and son, when there are
present other of the above circumstances; and

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:

(7) The failure of the vendee to take exclusive possession of all the property.

ATTY. FLORIDO:

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
55

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, petitioner's
action must fail.
In her further attempt to support her action for rescission, petitioner brings to our attention the
31 July 1990 Decision 30 of the RTC of Quezon City, Branch 92, in Criminal Case No. Q-89-2216.
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 creditor's 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 court's awards of moral damages, attorney's 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.

56

G.R. No. 178495

July 26, 2010

Iba, Zambales, Branch 71, in Civil Case No. RTC-354-I, is hereby AFFIRMED in all other
respects. Costs against defendant Rodolfo Noceda.3

SPOUSES RODOLFO A. NOCEDA and ERNA T. NOCEDA, Petitioners, vs. AURORA

ARBIZO-DIRECTO, Respondent.

Undaunted, petitioners filed a petition for review with this Court, which was docketed as G.R.
No. 119730. The Court found no reversible error, much less grave abuse of discretion, with the
factual findings of the two courts below, and thus denied the petition on September 2, 1999.4
The decision became final and executory, and a writ of execution was duly issued by the RTC on
March 6, 2001 in Civil Case No. RTC-354-I.

DECISION
NACHURA, J.:

On December 4, 2003, petitioners instituted an action for quieting of title against respondent,
docketed as Civil Case No. 2108-I. In the complaint, petitioners admitted that Civil Case No.
RTC-354-I was decided in favor of respondent and a writ of execution had been issued, ordering
them to vacate the property. However, petitioners claimed that the land, which was the subject
matter of Civil Case No. RTC-354-I, was the same parcel of land owned by spouses Dahipon
from whom they purchased a portion; and that a title (TCT No. T-37468) was, in fact, issued in
their name. Petitioners prayed for the issuance of a writ of preliminary injunction to enjoin the
implementation of the Writ of Execution dated March 6, 2001 in Civil Case No. RTC-354-I, and
that "a declaration be made that the property bought, occupied and now titled in the name of
[petitioners] was formerly part and subdivision of Lot No. 1121 Pls-468-D, covered by OCT No.
P-9036 in the name of Cecilia Obispo-Dahipon."5

Assailed in the instant petition is the Decision1 of the Court of Appeals (CA), dismissing the
appeal on the ground of res judicata.
On September 16, 1986, respondent Aurora Arbizo-Directo filed a complaint against her
nephew, herein petitioner Rodolfo Noceda, for "Recovery of Possession and Ownership and
Rescission/Annulment of Donation" with the Regional Trial Court (RTC) of Iba, Zambales,
Branch 71, docketed as Civil Case No. RTC-354-I. Respondent alleged that she and her co-heirs
have extra-judicially settled the property they inherited from their late father on August 19,
1981, consisting of a parcel of land, described as Lot No. 1121, situated in Bitoong, San Isidro,
Cabangan, Zambales. She donated a portion of her hereditary share to her nephew, but the
latter occupied a bigger area, claiming ownership thereof since September 1985.

Respondent filed a Motion to Dismiss on the ground of res judicata. Respondent averred that
petitioners, aware of their defeat in Civil Case No. RTC-354-I, surreptitiously negotiated with
Cecilia Obispo-Dahipon for the sale of the land and filed the present suit in order to subvert the
execution thereof.

Judgment was rendered in favor of respondent on November 6, 1991, where the RTC (a)
declared the Extra-Judicial Settlement-Partition dated August 19, 1981 valid; (b) declared the
Deed of Donation dated June 1, 1981 revoked; (c) ordered 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) ordered 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; and (e) ordered the defendant to pay attorneys fees in the amount of P5,000.00.2
The decision was appealed to the CA, docketed as CA-G.R. CV No. 38126.

The trial court denied the motion, holding that there was no identity of causes of action.
Trial thereafter ensued. On January 25, 2006, after petitioners presented their evidence,
respondent filed a Demurrer to Evidence, stating that the claim of ownership and possession of
petitioners on the basis of the title emanating from that of Cecilia Obispo-Dahipon was already
raised in the previous case (Civil Case No. RTC-354-I).

On January 5, 1995, spouses Rodolfo Dahipon and Cecilia Obispo- Dahipon filed a complaint for
recovery of ownership and possession, and annulment of sale and damages against spouses
Antonio and Dominga Arbizo, spouses Rodolfo and Erna Noceda, and Aurora Arbizo-Directo with
the RTC, Iba, Zambales, Branch 70. This was docketed as Civil Case No. RTC-1106-I. In the
complaint, spouses Dahipon alleged that they were the registered owners of a parcel of land,
consisting of 127,298 square meters, situated in Barangay San Isidro, Cabangan, Zambales,
designated as Lot 1121-A. The Original Certificate of Title No. P-9036 over the land was issued
in the name of Cecilia Obispo-Dahipon, pursuant to Free Patent No. 548781. Spouses Dahipon
claimed that the defendants therein purchased portions of the land from them without paying
the full amount. Except for Aurora, a compromise agreement was entered into by the parties, as
a result of which, a deed of absolute sale was executed, and TCT No. T-50730 was issued in the
name of spouses Noceda for their portion of the land. For her part, Aurora questioned Dahipons
alleged ownership over the same parcel of land by filing an adverse claim.

On February 22, 2006, the trial court issued a resolution granting the demurrer to evidence.
The CA affirmed. Hence, petitioners now come to this Court, raising the following issues:
WHETHER OR NOT THE PRINCIPLE OF RES JUDICATA OR DOCTRINE OF CONCLUSIVENESS OF
JUDGMENT IS APPLICABLE UNDER THE FACTS OBTAINING IN THE PRESENT CASE[;]
WHETHER OR NOT THE RESPONDENT HAS A BETTER TITLE THAN THE PETITIONERS[; and]
WHETHER OR NOT THE RULING ON PURCHASERS IN BAD FAITH IS APPLICABLE IN THE
PRESENT CASE[.]6

In the meantime, a decision was rendered in CA-G.R. CV No. 38126 on March 31, 1995 with the
following fallo:

Petitioners assert that res judicata7 does not apply, considering that the essential requisites as
to the identity of parties, subject matter, and causes of action are not present.

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,

The petition is bereft of merit.

57

Justice Feliciano, in Smith Bell & Company (Phils.), Inc. v. Court of Appeals (197 SCRA 201, 210
[1991]), reiterated Lopez v. Reyes (76 SCRA 179 [1977]) in regard to the distinction between
bar by former judgment which bars the prosecution of a second action upon the same claim,
demand, or cause of action, and conclusiveness of judgment which bars the relitigation of
particular facts or issues in another litigation between the same parties on a different claim or
cause of action.

The doctrine of res judicata is set forth in Section 47 of Rule 39 of the Rules of Court, as
follows:
Sec. 47. Effect of judgments or final orders. - The effect of a judgment or final order rendered
by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may
be as follows:

The general rule precluding the relitigation of material facts or questions which were in issue
and adjudicated in former action are commonly applied to all matters essentially connected with
the subject matter of the litigation. Thus, it extends to questions necessarily implied in the final
judgment, although no specific finding may have been made in reference thereto and although
such matters were directly referred to in the pleadings and were not actually or formally
presented. Under this rule, if the record of the former trial shows that the judgment could not
have been rendered without deciding the particular matter, it will be considered as having
settled that matter as to all future actions between the parties and if a judgment necessarily
presupposes certain premises, they are as conclusive as the judgment itself.11

xxxx
(b) In other cases, the judgment or final order is, with respect to the matter directly
adjudged or as to any other matter that could have been raised in relation thereto,
conclusive between the parties and their successors in interest by title subsequent to
the commencement of the action or special proceeding, litigating for the same thing
and under the same title and in the same capacity; and
(c) In any other litigation between the same parties or their successors in interest,
that only is deemed to have been adjudged in a former judgment or final order which
appears upon its face to have been so adjudged, or which actually and necessarily
included therein or necessary thereto.

The foregoing disquisition finds application in the case at bar. Undeniably, the present case is
closely related to the previous case (Civil Case No. RTC-354-I), where petitioners raised the
issue of ownership and possession of Lot No. 1121 and the annulment of the donation of said
lot to them. The RTC found for respondent, declaring the deed of donation she executed in
favor of petitioners revoked; and ordered petitioners to vacate and reconvey the donated
portion to respondent. The decision of the RTC was affirmed by the CA, and became final with
the denial of the petition for review by this Court in G.R. No. 119730. In that case, the Court
noted the established fact "that petitioner Noceda occupied not only the portion donated to him
by respondent Aurora Arbizo-Directo, 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."12 Clearly, therefore, petitioners have no right of ownership or
possession over the land in question.1avvph!1

The principle of res judicata lays down two main rules, namely: (1) the judgment or decree of a
court of competent jurisdiction on the merits concludes the litigation between the parties and
their privies and constitutes a bar to a new action or suit involving the same cause of action
either before the same or any other tribunal; and (2) any right, fact, or matter in issue directly
adjudicated or necessarily involved in the determination of an action before a competent court
in which a judgment or decree is rendered on the merits is conclusively settled by the judgment
therein and cannot again be litigated between the parties and their privies whether or not the
claims or demands, purposes, or subject matters of the two suits are the same. These two main
rules mark the distinction between the principles governing the two typical cases in which a
judgment may operate as evidence.8] The first general rule above stated, and which corresponds
to the afore-quoted paragraph (b) of Section 47, Rule 39 of the Rules of Court, is referred to as
"bar by former judgment"; while the second general rule, which is embodied in paragraph (c) of
the same section and rule, is known as "conclusiveness of judgment."9

Under the principle of conclusiveness of judgment, such material fact becomes binding and
conclusive on the parties. When a right or fact has been judicially tried and determined by a
court of competent jurisdiction, or when an opportunity for such trial has been given, the
judgment of the court, as long as it remains unreversed, should be conclusive upon the parties
and those in privity with them.13 Thus, petitioners can no longer question respondents
ownership over Lot No. 1121 in the instant suit for quieting of title. Simply put, conclusiveness
of judgment bars the relitigation of particular facts or issues in another litigation between the
same parties on a different claim or cause of action.14

The Court in Calalang v. Register of Deeds of Quezon City10 explained the second concept which
we reiterate herein, to wit:
The second concept conclusiveness of judgment states that a fact or question which was
in issue in a former suit and was there judicially passed upon and determined by a court of
competent jurisdiction, is conclusively settled by the judgment therein as far as the parties to
that action and persons in privity with them are concerned and cannot be again litigated in any
future action between such parties or their privies, in the same court or any other court of
concurrent jurisdiction on either the same or different cause of action, while the judgment
remains unreversed by proper authority. It has been held that in order that a judgment in one
action can be conclusive as to a particular matter in another action between the same parties or
their privies, it is essential that the issue be identical. If a particular point or question is in issue
in the second action, and the judgment will depend on the determination of that particular point
or question, a former judgment between the same parties or their privies will be final and
conclusive in the second if that same point or question was in issue and adjudicated in the first
suit (Nabus v. Court of Appeals, 193 SCRA 732 [1991]). Identity of cause of action is not
required but merely identity of issue.

Furthermore, we agree that petitioners instituted the instant action with unclean hands. Aware
of their defeat in the previous case, they attempted to thwart execution and assert their alleged
ownership over the land through their purported purchase of a lot from Cecilia Obispo-Dahipon.
This later transaction appears to be suspect. A perusal of G.R. No. 119730 reveals that the
Court was not unaware of Dahipons alleged claim over the same parcel of land. It noted that
Dahipon did not even bother to appear in court to present her free patent upon respondents
request, or to intervene in the case, if she really had any legitimate interest over the land in
question.15 In any event, petitioners assertion of alleged good title over the land cannot stand
considering that they purchased the piece of land from Dahipon knowing fully well that the
same was in the adverse possession of another.

58

Thus, we find no reversible error in the appellate courts ruling that petitioners are in fact buyers
in bad faith. We quote:
With appellants actual knowledge of facts that would impel a reasonable man to inquire further
on [a] possible defect in the title of Obispo, considering that she was found not to have been in
actual occupation of the land in CA-G.R. CV No. 38126, they cannot simply invoke protection of
the law as purchasers in good faith and for value. In a suit to quiet title, defendant may set up
equitable as well as legal defenses, including acquisition of title by adverse possession and a
prior adjudication on the question under the rule on res judicata. Appellants status as holders in
bad faith of a certificate of title, taken together with the preclusive effect of the right of
possession and ownership over the disputed portion, which was adjudged in favor of appellee in
Civil Case No. RTC-354-I, thus provide ample justification for the court a quo to grant the
demurrer to evidence and dismiss their suit for quieting of title filed against the said appellee. 16
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 87026 is AFFIRMED in
toto.
SO ORDERED.

59

G.R. No. 126996

February 15, 2000

on the W. by heirs of Estanislao Biasaga and Elena delos Reyes; containing an area of
2,077 sq. m., more or less, and covered Tax Decl. No. 1156.

HEIRS OF CESARIO VELASQUEZ, namely: ANASTACIA VELASQUEZ, SOFIA

VELASQUEZ, ELISEO VELASQUEZ, JOSE VELASQUEZ, CORAZON VELASQUEZ,
LEONORA VELASQUEZ, and NIEVES VELASQUEZ, petitioners,
vs.
THE COURT OF APPEALS and HEIRS OF ANATALIA DE GUZMAN, namely: SANTIAGO
MENESES, ANDRES MENESES, FELICIDAD MENESES, and APOLONIO MENESES,
respondents.

Sometime in 1989, the heirs of Anatalia de Guzman represented by Santiago, Andres, Felicidad
and Apolonio,4 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 above-mentioned conjugal properties of the Spouses Aquino. The complaint alleged
that Leoncia de Guzman, before her death, had a talk with the plaintiffs' mother, Anatalia de
Guzman, with plaintiff Santiago Meneses and Tranquilina de Guzman and his son Cesario
Velasquez in attendance; that in the conference Leoncia told Anatalia de Guzman, Tranquilina
de Guzman and Cesario Velaquez 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 who is one of her sisters
had several children to support; Cesario Velasquez together with his mother allegedly promised
to divide the properties equally and to give the plaintiffs one-half (1/2) thereof; that they are
entitled to 1/2 of each of all the properties in question being the children of Anatalia de
Guzman, full blood sister of Leoncia de Guzman. Plaintiffs further claim that after the death of
Leoncia, defendants forcibly took possession of all the properties and despite plaintiffs' repeated
demands for partition, defendants refused. Plaintiffs pray for the nullity of any documents
covering the properties in question since they do not bear the genuine signatures of the Aquino
spouses, to order the partition of the properties between plaintiffs and defendants in equal
shares and to order the defendants to render an accounting of the produce of the land in
question from the time defendants forcibly took possession until partition shall have been
effected.5

GONZAGA-REYES, J.:
Before us is a Petition for Review on Certiorari filed by petitioners assailing the December 29,
1995 decision1 of the Court of Appeals in CA-G.R. CV No 39729 affirming the decision of the
Regional Trial Court of Pangasinan, Branch 40, Dagupan City2 in Civil Case No. D-9288 and the
resolution dated November 6, 1996 denying their motion for reconsideration. 3
Spouses Leoncia de Guzman and Cornelio Aquino died intestate sometime in 1945 and 1947,
respectively 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).
During the existence of their marriage, spouses Aquino were able to acquire the following real
properties:
a) A parcel of land (residential) situated in Guiguilonen, Mangaldan, Pangasinan.
Bounded on the S. by Simeon Meneses; on the E. by Dionisio Muyargas; on the N. by
road to San Jacinto; and on the W. by Juan Magalong; containing an area of 995 sq.
m. more or less and assessed for the current year;

Defendants filed their Amended Answer with counterclaim alleging among others that during the
lifetime of spouses Cornelio Aquino and Leoncia de Guzman, they had already disposed of their
properties in favor of petitioners' predecessors-in-interest, Cesario Velasquez and Camila de
Guzman, and petitioners Anastacia and Jose Velasquez in the following manner:

b) A parcel of land (sugar cane) and coconut land situated in Poblacion, Mangaldan,
Pangasinan. Bounded on the N. by Jose Lopez and Cipriano Serafica; on the E. by
road to Mapandan; on the S. by Vicente Doyola and Dalmacio Gonzales; and on the
W. by Eleuterio Serafica; containing an area of 27,849 sq. m., more or less;

(1) The third and sixth parcels were conveyed to defendants' late parents Cesario
Velasquez and Camila de Guzman, by virtue of a Escritura de Donation Propter
Nuptias dated February 15, 1919;

c) A parcel of land situated in Malabago, Mangaldan, Pangasinan. Bounded on the N.

by Fausto Tandingan; on the E. by Segundo Toralba, Fausto Tandingan and Jacinta
Biasaga; on the S. by Roberto Mamapon; and on the W. by heirs: of Estanislao
Biasaga and Elena delos Reyes; containing an area of 2,077 sq. m. more or less;

(2) The second parcel was conveyed to defendants' late parents Cesario Velasquez
and Camila de Guzman by virtue of a deed of conveyance dated July 14, 1939, for
which Transfer Certificate of Title No. 15129 was issued by the Registry of Deeds of
Pangasinan in the names of Cesario Velasquez and Camila de Guzman;

d) A parcel of land (sugarcane), situated in Embarcadero, Mangaldan, Pangasinan.

Bounded on the N. by Basilio Duya and Bernardo Cano; on the E. by Simeon Manaois;
on the S. by a road; and on the W. by Loreto de Guzman; containing an area of 2,857
sq. m., more or less; It is covered by Tax Decl. No. 231;

(3) The first parcel was likewise conveyed to defendants Jose Velasquez and
Anastacia Velasquez by virtue of a deed of conveyance (Donation Intervivos) dated
April 10, 1939;
(4) As to the fourth and fifth parcels, the same were owned and possessed by third
parties.

e) A parcel of residential land situated in Bari, Mangaldan, Pangasinan. Bounded on

the N. by Andres Aquino; on the E. by Arcadio Barromeo; on the S. by National Road;
on the W. by Andres Aquino; containing an area of 595 sq. m., more or less and
covered by Tax Decl. No. 453;

Defendants denied that a conference took place between Leoncia de Guzman and plaintiff
Santiago Meneses and his mother Anatalia with Tranquilina (defendants' grandmother) and
Cesario Velasquez (defendants' father), nor did the latter promise to divide the properties
equally with the plaintiffs or to execute a deed of partition; that they did not forcibly take
possession of the subject properties since their possession thereof has been peaceful, open,
continuous and adverse in character to the exclusion of all others. By way of affirmative

f) A parcel of unirrigated riceland situated in Malabago, Mangaldan, Pangasinan.

Bounded on the N. by Segundo Tandingan and Jacinto Biasaga; on the E. by Segundo
Toralba, Fausto Tandingan and Jacinto Biasaga; on the S. by Roberto Mamapon; and
60

defenses, defendants claim that the instant case is already barred by res judicata since there
had been three previous cases involving the same parties, subject matter and cause of action
which were all dismissed, the last of which was dismissed for failure to prosecute; that plaintiffs'
action to annul the documents covering the disposition of the properties is also barred by the
statute of limitations; that the action for partition presupposes the existence of a property held
in common as agreed upon or admitted by the parties but the co-ownership ceases when one of
the parties alleges exclusive ownership, thus the action becomes one for a title and recovery of
ownership and the action prescribes in four years.6

former over the subject six (6) parcels of land in equal shares 1/2 belongs to
Anatalia de Guzman and the other half, to Tranquilina de Guzman.
This, notwithstanding the claim of defendants that the first parcel was donated to
Jose Velasquez and Anastacia Velasquez by way of "Donations Intervivos."
The second parcel, sold to Cesario Velasquez and Camila de Guzman;
The third and 6th parcels, donated to Cesario Velasquez and Camila de Guzman; and

On May 18, 1990, a pre-trial order was issued by the trial court which defined the issues to be
resolved as follows:7

The 4th and 5th parcels, sold to third parties.

xxx

xxx

xxx
The claim of Cesario Velasquez that he was adopted by the Spouses Cornelio Aquino
and Leoncia de Guzman is not supported by evidence.

1. Whether or not the properties in question form part of the estate of Anatalia de
Guzman and Sps. Cornelio Aquino and Leoncia de Guzman;

The Court finds plaintiff Santiago Meneses credible; and his testimony, credible by
itself. Santiago Meneses who is 80 years old testified spontaneously in a clear, straight
forward and convincing manner.

2. Whether or not plaintiff's action is already barred by the statutes of limitation and
res judicata; and

The version of the defendants td the effect that spouses Cornelio de Guzman and
Leoncia de Guzman left no properties cannot be given serious consideration. It is
incredible and unbelievable.

3. Whether or not the properties in question can be the subject of an action for
partition.
After trial, the decision was rendered on April 8, 1992 which ruled as follow:8

How did the spouses Cornelio Aquino and Leoncia de Guzman support and maintain
themselves if they disposed of their valuable properties, the six (6) parcels of land in
question, during their lifetime? Did they really leave no properties? These questions
remained unanswered.

From the evidence, the Court finds that the plaintiffs are brothers and sisters who are
the children of Estanislao Meneses and Anatalia de Guzman and the defendants are
the children of plaintiffs' cousin Cesario Velasquez and Camila de Guzman. The
defendants' mother Tranquilina de Guzman and plaintiffs' mother Anatalia de Guzman
and Leoncia de Guzman are full blooded sisters. The subject six (6) parcels of land
were conjugal properties of Leoncia de Guzman and her husband Cornelio Aquino
were in their possession until their death in 1945 and 1947, respectively. After the
death of plaintiffs' mother Anatalia de Guzman on September 14, 1978, plaintiff
Santiago Meneses came across an affidavit of Cesario Velasquez notarized by Atty.
Elpidio Barrozo stating that he is an adopted son of said spouses Cornelio Aquino and
Leoncia de Guzman (Exhibit "A") which, is however, not supported by evidence (a
court order). The said affidavit mentioned, among other things, a house and a parcel
of land covered by Tax Declaration No. 699 located at Guiguilonen, Mangaldan,
Pangasinan, (Exhibit "B"). The sugar cane and coconut land situated at Poblacion,
Mangaldan, Pangasinan, containing an area of 27,849 square meters covered by Tax
Declaration No. 978 (Exhibit "C") which was in the possession of spouses Cornelio
Aquino and Leoncia de Guzman until their death. Sometime in 1944 Leoncia de
Guzman called a conference among the plaintiffs and spouses Cesario Velasquez and
Camila de Guzman and told them that all their conjugal properties shall be divided
equally between Anatalia de Guzman and Tranquilina de Guzman and that she did not
sign documents regarding the conveyance of their properties; and that the property
(parcel B) in Malabago, Mangaldan, Pangasinan, which yielding an annual produce
worth P15,000.00 was divided between Anatalia de Guzman and Tranquilina de
Guzman.

The defendants failed to prove their allegations that the Spouses Cornelio Aquino and
Leoncia de Guzman disposed of their properties during their lifetime.
Defendant Eliseo Velasquez is a lawyer and his co-defendant brothers are retired
government officials.
On the other hand, the plaintiffs are simple, innocent country folks who have not
obtained substantial level of education.
The Court believes and so holds that the defendants manipulated the transfer unto
themselves all the properties of Spouses Cornelio Aquino and Leoncia de Guzman;
thus, depriving the plaintiffs their shares in the inheritance, to their prejudice and
damage.
Insofar, as the issue of whether or not partition prescribes, the court believes and so
rules that it does not.
xxx

Spouses Cornelio Aquino and Leoncia de Guzman who were childless had Anatalia de
Guzman and Tranquilina de Guzman as their legal heirs. The latter succeeded the

xxx

xxx

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs:

61

(1) Declaring Anatalia de Guzman and Tranquilina de Guzman as the legal heirs of
Spouses Cornelio Aquino and Leoncia de Guzman; and that the former succeeded the
latter over the six (6) parcels of land in question in equal shares 1/2 belongs to
Anatalia de Guzman or to her heirs; and 1/2, to Tranquilina de Guzman or to her
heirs;

V. WHETHER OR NOT PARTITION IS THE PROPER ACTION IN THE INSTANT CASE.

In their Comment, private respondents allege that the issue of res judicata has been sufficiently
discussed and considered and the trial court opted to inquire into their legitimate grievance and
came up with a judicious determination of the case on the merits; that the present case involves
respondents who are simple, ignorant folks who have not obtained substantial level of education
and are unaware of the legal intricacies and technicalities in pursuing their valid claim. They
further contend that this action is not yet barred by the statute of limitation since an action for
partition is imprescriptible and that the court correctly ruled that the instant action for partition
is proper.

(2) Declaring the Donation Intervivos in favor of Jose Velasquez and Anastacia
Velasquez over the first parcel of land; the Deed of Sale to Cesario Velasquez and
Camila de Guzman over the second parcel; the Deed of Donation to Cesario Velasquez
and Camila de Guzman over the 3rd and 6th parcels; the Deed of Sale to third parties
over the 4th and 5th parcels as null and void insofar as 1/2 of the six (6) parcels are
concerned which legitimately belong to the plaintiffs;

We find merit in the petition.

(3) Ordering the defendants to reconvey to the plaintiffs 1/2 each of the six (6)
properties in question and if this is not possible, to reconvey the whole of the sugar
cane and coconut land situated at Poblacion, Mangaldan, Pangasinan, containing an
area of 27,849 square meters, covered by Tax Declaration No. 978 (Exhibit "C")
parcel B, par. 2 of the complainant; and

Petitioners contend that public respondent erred when it held that the issue of res judicata was
never raised either in the Answer or at the Pre-trial such that it was not under consideration. We
agree with the petitioner. The records show that the defense of res judicata was raised in the
petitioners' Amended Answer filed before the trial court more particularly under paragraph 18,
to wit:

(4) Ordering the defendants jointly and severally to pay to plaintiffs P50,000.00, as
damages, P5,000.00, as attorney's fees and P3,000.00, as litigation expenses.

18. b. The case at bar is already barred by RES JUDICATA, there having been three

(3) previous cases involving either the predecessors-in-interest of the parties herein or
of the present parties themselves, the same subject matter, and the same cause of
action, which were all dismissed, the last dismissal having been ordered by this very
same Honorable Court in Civil Case No. D-8811 on October 21, 1988 for failure to
prosecute which dismissal has the effect of an adjudication on the merits and
therefore with prejudice as this Honorable court did not provide otherwise (Sec. 3.,
Rule 17) and the Plaintiffs in said case, who are the same plaintiffs in the present case
did not appeal from said order of dismissal.

Dissatisfied, defendants appealed the decision to the respondent Court of Appeals which
affirmed the same in a decision dated December 29, 1995.
The Court of Appeals rejected the defense of res judicata which was never pleaded nor raised
earlier, and for that reason was deemed waived. The appellate court also dismissed the claim of
prescription as an action for partition is imprescriptible. As regards the previous transfers
executed in favor of the defendants, the court affirmed the trial court's finding that the transfers
were repudiated before the death of Leoncia.9

Said Amended Answer was admitted by the trial court in its Order dated March 2, 1990 11 and
was one of the issues stipulated for resolution in its Pre-trial Order dated May 18, 1990. Thus, it
was clear error for respondent court to conclude that res judicata was never raised in the lower
court.

A motion for reconsideration was filed by petitioners but the same was denied by the
respondent court in a resolution dated November 6, 1996.

The next question is whether res judicata is present in the instant case. We rule in the
affirmative. Petitioners in their Memorandum established that there were three (3) earlier cases
filed by private respondents against petitioners involving the same subject matter and issues as
in the instant case which were all dismissed, to wit:

Attributing reversible errors to the appellate court, petitioners elevated the case to this Court on
the following main issues:10
I. WHETHER OR NOT THE INSTANT CASE IS BARRED BY RES JUDICATA AND BY THE
STATUTE OF LIMITATIONS.

The first Complaint filed by Anatalia de Guzman, mother of Tranquilina de Guzman

and his son Cesario Velasquez, docketed as Civil Case No. 11378 of the then Court of
First Instance of Pangasinan. Said action was dismissed on August 18, 1950.

II. WHETHER OR NOT THE PROPERTIES MENTIONED IN THE COMPLAINT FORM

PART OF THE ESTATE OF THE SPOUSES CORNELIO AQUINO AND LEONCIA DE
GUZMAN.

Thirty four (34) years after, or on October 9, 1984, private respondent Santiago
Meneses filed a second Complaint similar to the Complaint of his mother (Civil Case
No. 11378) which was docketed as Civil Case No. D-7584, entitled "Heirs of Anatalia
de Guzman, represented by Santiago Meneses vs. Cesario Velasquez, defendant. In
the order of the Regional Trial Court, Branch 41, Dagupan City, dated May 28, 1986,
this Complaint was dismissed for failure to prosecute without prejudice (Exh. "16").

III. WHETHER OR NOT THE PETITIONERS HAVE ACQUIRED ABSOLUTE AND

EXCLUSIVE OWNERSHIP OF THE PROPERTIES IN QUESTION.
IV. WHETHER OR NOT PRIVATE RESPONDENT HEIRS OF ANATALIA DE GUZMAN ARE
LEGAL HEIRS OF SPOUSES CORNELIO AQUINO AND LEONCIA DE GUZMAN.
62

Private respondent Santiago Meneses refiled the Complaint allegedly joined this time
by his siblings on October 23, 1987; which was docketed as Civil Case No. P-8811 and
entitled "Heirs of Anatalia de Guzman, namely: Santiago Meneses, Apolonio Meneses,
Andres Meneses, Luis Meneses, Felicidad Meneses, Plaintiffs, versus Heirs of Cesario
Velasquez, namely: Anastacia Velasquez, Sofia Velasquez, Eliseo Velasquez, Jose
Velasquez, Leonora Velasquez, Nieves Velasquez, Defendants. (Exh. "17"). On
October 21, 1988; the Court a quo dismissed this Complaint as follows: "For failure to
prosecute, the case is hereby dismissed without costs." (Exh. "18").

Petitioner's submission is impressed with merit.

After examination of the records, we find that there is no preponderance of evidence adduced
during the trial to support the findings and conclusions of the courts below, which error justifies
a review of said evidence. As a rule, factual findings of the lower courts are final and binding
upon this Court. This Court is not expected nor required to examine or contrast the oral and
documentary evidence submitted by the parties.14 However, although this Court is not a trier of
facts, it has the authority to review and reverse the factual findings of the lower courts if it finds
that these do not conform to the evidence on records,15 in the instant case, we are not bound to
adhere to the general rule since both courts clearly failed to consider facts and circumstances
which should have drawn a different conclusions.16

Petitioners' allegations were never rebutted by private respondents in their Comment as the only
defense raised therein was that the application of the principle of res judicata should not
sacrifice justice to technicality and it is within the power of the court to suspend its own rules or
to except a particular case from its operations whenever the purpose of justice requires it. We
have examined the third complaint filed by private respondents on October 23, 1987 and
compared it with the instant case, and we found that the allegations contained in both
complaints are the same, and that there is identity of parties, subject matter and cause of
action. Thus the requisites of res judicata are present, namely (a) the former judgment or order
must be final; (b) it must be a judgment or order on the merits; (c) it must have been rendered
by a court having jurisdiction over the subject matter and the parties; and (d) there must be
between the first and the second actions, identity of parties, of subject matter and of cause of
action. Since the dismissal of the third case did not contain any condition at all, it has the effect
of an adjudication on the merits as it is understood to be with prejudice.12 On this ground alone,
the trial court should have already dismissed this case. However, considering that this case had
already reached this Court by way of a petition for review on certiorari, it would be more in
keeping with substantial justice if the controversy between the parties were to be resolved on
the merits rather than on a procedural technicality in the light of the express mandate of the
rules that they be "liberally construed in order to promote their object and to assist the parties
in obtaining just, speedy and inexpensive determination of every action and proceeding." 13

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.17 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.18
We are unable to sustain the findings of the respondent Court that it has been adequately
shown that the alleged transfers of properties to the petitioners' predecessor-in-interest made
by the Aquino spouses were repudiated before Leoncia's death; thus private respondents are
still entitled to share in the subject properties. There is no preponderance of evidence to support
the findings and conclusions of both courts. The trial court declared the nullity of the donation
inter vivos in favor of petitioners Jose and Anastacia Velasquez over the first parcel of land
described in the complaint, the deed of sale to Cesario Velasquez and Camila de Guzman over
the second parcel and the deed of donation propter nuptias over the third and sixth parcels and
the sale to third parties of fourth and fifth parcels insofar as the 1/2 of these parcels of land are
concerned which "legitimately belong to plaintiff." It would appear that the trial court relied
solely on the basis of Santiago Meneses' testimony "that in 1944 when his aunt Leoncia de
Guzman was still alive, she called a conference among them, the plaintiffs and their mother
Anatalia, Cesario Velasquez and his mother Tranquilina, telling them that all their properties
which are conjugal in nature shall be divided equally between Anatalia and Tranquilina and not
to believe the documents purportedly signed by her because she did not sign them". 19 Private
respondent Santiago Meneses' testimony is to the effect that Leoncia never signed any deed of
conveyance of the subject properties in favor of the petitioners. However, Santiago Meneses'
testimony was never corroborated by any other evidence despite his testimony that the alleged
conference was also made in the presence of third parties. Moreover, if the alleged conference
really took place in 1944, a year before Leoncia's death, Leoncia could have executed another
set of documents revoking or repudiating whatever dispositions she had earlier made to show
her alleged intention of giving her properties in equal shares to her sisters Anatalia and
Tranquilina de Guzman but there was none. The trial court found the testimony of Santiago
Meneses who is eighty years old to be credible, and this was affirmed by the respondent court
which stated that the matter of ascribing credibility belongs to the trial court. However, the fact
that a person has reached the "twilight of his life" is not always a guaranty that he would tell
the truth. It is also quite common that advanced age makes a person mentally dull and
completely hazy about things which has appeared to him, and at times it weakens his resistance
to outside influence.20

Petitioners next contend that private respondent Santiago Meneses failed to prove the nullity of
the Deeds of Conveyance executed by the Aquino spouses in favor of petitioners Jose and
Anastacia Velasquez and their predecessors-in-interest Cesario Velasquez and Camila de
Guzman since he failed to adduce any evidence to support his claim other than his bare
allegations of its nullity. Petitioners claim that they were able to show by documentary evidence
that the Aquino spouses during their lifetime disposed of the four parcels of land subject of the
complaint, to wit: (a) Escritura de donation propter nuptias dated February 15, 1919 in favor of
then future spouses Cesario Velasquez and Camila de Guzman (petitioners' parents) conveying
to them a portion of the second parcel and the entirety of the third and sixth parcels in the
complaint; (b) Deed of donation inter vivos dated April 10, 1939 conveying the first parcel in
favor of petitioners Anastacia Velasquez and Jose Velasquez; (c) Escritura de Compreventa
dated August 25, 1924 conveying another portion of the second parcel in favor of Cesario
Velasquez and Camila de Guzman with a P500 consideration: (d) Deed of Conveyance dated
July 14, 1939 in favor of Cesario Velasquez and Camila de Guzman conveying to them the
remaining portion of the second parcel for a consideration of P600 and confirming in the same
Deed the Escritura de donation propter nuptias and Escritura de compraventa abovementioned.
Petitioners claim that the record is bereft of any evidence showing the infirmities in these
formidable array of documentary evidence but the courts below declared their nullity on the
basis of the "telltale" story of Santiago Meneses. They contend that in giving credence to the
testimony of Santiago Meneses that all the deeds of conveyances executed by the Aquino
spouses in favor of the petitioners were a nullity, Santiago would want to make it appear that
the spouses Aquino, in giving dowry thru escritura de donation propter nuptias and donation
inter vivos, were only fooling the innocent youngters and then future spouses Cesario Velasquez
and Camila de Guzman, and the innocent minors donees Jose and Anastacia Velaquez
respectively.

On the other hand, petitioners were able to adduce the uncontroverted and ancient
documentary evidence showing that during the lifetime of the Aquino spouses they had already
disposed of four of the six parcels of land subject of the complaint starting in the year 1919, and
63

the latest was in 1939 as follows: (a) Escritura de donation propter nuptias dated February 15,
1919 in favor of the future spouses Cesario Velasquez and Camila de Guzman (petitioners'
parents) conveying to them a portion of the second parcel in the complaint and the entirety of
the third and sixth parcels;21 (b) Deed of donation inter vivos dated April 10, 1939 conveying the
first parcel in favor of petitioners Anastacia Velasquez and Jose Velasquez; 22 (c) Escritura de
Compraventa dated August 25, 1924 conveying another portion of the second parcel in favor of
Cesario Velasquez and Camila de Guzman with a P500 consideration;23 (d) Deed of Conveyance
dated July 14, 1939 in favor of Cesario Velasquez and Camila de Guzman conveying to them the
remaining portion of the second parcel for a consideration of P600 and confirming in the same
Deed the Escritura de donation propter nuptias and Escritura de compraventa
abovementioned.24 It was reversible error for the court to overlook the probative value of these
notarized documents.

fifth parcels, petitioners alleged that these were also conveyed to third persons and they do not
claim any right thereto.
In view of the foregoing, we conclude that this action of partition cannot be maintained. The
properties sought to be partitioned by private respondents have already been delivered to
petitioners and therefore no longer part of the hereditary estate which could be partitioned.
After finding that no co-ownership exist between private respondents and petitioners, we find
no reason to discuss the other arguments raised by the petitioners in support of their petition.
WHEREFORE, the petition is GRANTED. The questioned decision and resolution of respondent
Court of Appeals as well as the decision of the Regional Trial Court of Dagupan City are SET
ASIDE. The complaint in the trial court against petitioner is ORDERED DISMISSED.

A donation as a mode of acquiring ownership results in an effective transfer of title over the
property from the donor to the donee25 and the donation is perfected from the moment the
donor knows of the acceptance by the donee.26 And once a donation is accepted, the donee
becomes the absolute owner of the property donated.27 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.28 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.29 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 (Leoncia's 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.

SO ORDERED.

The Escritura compraventa over another portion of the second parcel and the Deed of
conveyance dated July 14, 1939 in favor of Cesario and Camila Velasquez over the remaining
portion of the second parcel is also valid. In fact in the deed of sale dated July 14, 1939, the
Aquino spouses ratified and confirmed the rights and interests of Cesario Velasquez and Camila
de Guzman including the previous deeds of conveyance executed by the Aquino spouses over
the second parcel in the complaint and such deed of sale became the basis for the issuance of
TCT No. 15129 in the names of Cesario Velasquez and Camila de Guzman on July 25, 1939. The
best proof of the ownership of the land is the certificate of title 30 and it requires more than a
bare allegation to defeat the face value of TCT No. 15129 which enjoys a legal presumption of
regularity of issuance.31 Notably, during the lifetime of Cesario Velasquez, he entered into
contracts of mortgage and lease over the property as annotated at the back of the certificate of
title which clearly established that he exercised full ownership and control over the property. It
is quite surprising that it was only after more than fifty years that private respondents asserted
co-ownership claim over the subject property.
The Aquino spouses had disposed the four parcels of land during their lifetime and the
documents were duly notarized so that these documents enjoy the presumption of validity. 32
Such presumption has not been overcome by private respondent Santiago Meneses with clear
and convincing evidence. In civil cases, the party having the burden of proof must establish his
case by a preponderance of evidence.33 Petitioners were able to establish that these four parcels
of land were validly conveyed to them by the Aquino spouses hence they no longer formed part
of the conjugal properties of the spouses at the time of their deaths. As regards the fourth and
64

G.R. No. 140487

April 2, 2001

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.

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.
LEON SILIM and ILDEFONSA MANGUBAT, respondents.

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. vs. 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.

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.

The antecedents of this case are as follows:

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.

WHEREFORE, in view of all the foregoing, judgement is hereby rendered:

KAPUNAN, J.:

1. Dismissing the complaint for lack of merit;

2. Dismissing the counterclaim for the sake of harmony and reconciliation
between the parties;

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.

3. With costs against plaintiffs.

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:
I. WHETHER THE COURT OF APPEALS ERRED IN DECLARING THE DONATION NULL
AND VOID DUE TO AN INVALID ACCEPTANCE BY THE DONEE.

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.

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.

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:

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
7497 of the New Civil Code.
We agree.

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
65

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

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

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:

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

Sections 745 and 749 of the New Civil Code provide:

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.

ART. 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.

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

ART. 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 Court of Appeals held that there was no valid acceptance of the donation because:
x

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.

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.

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."

"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 vs. Balanag,
37 Phils. 85; Alejandro vs. 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.)."

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.
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

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.

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.
66

SEC. 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.

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 vs. Intermediate Appellate
Court,15 the Court held:
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.

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

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.

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.

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.

WHEREFORE, the decision of the Court of Appeals is hereby REVERSED and SET ASIDE and the
decision of the Regional Trial Court is REINSTATED.

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 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 Juan.

SO ORDERED.

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:

67

G.R. No. 111904

October 5, 2000

In their opposition, the Gestopas and the Danlags averred that the deed of donation dated
January 16, 1973 was 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.

SPS. AGRIPINO GESTOPA and ISABEL SILARIO GESTOPA, petitioners,

vs.
COURT OF APPEALS and MERCEDES DANLAG y PILAPIL, respondents.

On December 27, 1991, the trial court rendered its decision, thus:

DECISION

"WHEREFORE, the foregoing considered, the Court hereby renders judgment in favor of the
defendants and against the plaintiff:

QUISUMBING, J.:
This petition for review,1 under Rule 45 of the Rules of Court, assails the decision2 of 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.

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).

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 Danlag-Pilapil.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.

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. 18defendant); Deed of Sale dated December 18, 1979 (Exh. T plaintiff; Exh. 9defendant); 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.

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.

[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.

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 revocation6 recovering the six parcels of land subject of the aforecited deed
of donation inter vivos.

SO ORDERED."8
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.

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.

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.
68

On August 31, 1993, the appellate court reversed the trial court. It ruled:

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.

"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;

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.11

2. Declaring the Revocation of Donation dated June 4, 1979 to be null and void and
therefore of no force and effect;

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:

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;

"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;

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;

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.

5. Declaring the above-mentioned deeds of sale to be null and void and therefore of
no force and effect;

xxx

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.

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

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."

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.

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:

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 HONORABLE COURT OF APPEALS, TWELFTH DIVISION, HAS GRAVELY ERRED IN

REVERSING THE DECISION OF THE COURT A QUO."10

69

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.

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.

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.1wphi1
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 Donee cannot dispose
and/or sell the properties donated during our life-time, and that we are the one enjoying all the
fruits thereof."20
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.

70

G.R. No. 155810

August 13, 2004

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.

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.

Branch 6 of the Regional Trial Court of Dipolog City decided the case in favor of
defendants-appellees, 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

DECISION
TINGA, J.:

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

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:

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.

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.

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 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.

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

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.

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 T-4003714 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.

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.
71

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.

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.

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.

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 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.

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

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;

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:

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;

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)

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:
72

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
73

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 T-40038
(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.

74