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FIRST DIVISION A parcel of land known as Lot No. 3805-B situated at Olingan, Dipolog City, with an area of about 18,934 square meters, more or less, duly covered by [G.R. No. 150179. April 30, 2003] Transfer Certificate of Title No. T-6672 and assessed at P5,890 according to Tax Dec. No. 009-761; HEIRS OF WILLIAM SEVILLA, NAMELY: WILFREDO SEVILLA, WILSON SEVILLA, WILMA SEVILLA, WILLINGTON SEVILLA, AND WILLIAM SEVILLA, JR., HEIRS PARCEL III: OF MARIA SEVILLA, NAMELY: AMADOR SEVILLA, JENO CORTES, VICTOR CORTES, MARICEL CORTES, ALELEI* CORTES AND ANJEI** CORTES, A parcel of land known as Lot No. 837-1/4 situated at Magsaysay Street, petitioners, vs. LEOPOLDO SEVILLA, PETER SEVILLA, AND LUZVILLA Dipolog City, with an area of about 880 square meters more or less, duly SEVILLA, respondents. covered by Original Certificate of Title No. 0-6064 and assessed at P12,870.00 according to Tax Dec. No. 020-1078; D E C I S I O N PARCEL IV: YNARES-SANTIAGO, J.: A parcel of residential land known as Lot No. 1106-B-3 situated at Sta. One who alleges defect or lack of valid consent to a contract by reason of Filomena, Dipolog City, with an area of 300 square meters, more or less, fraud or undue influence must establish by full, clear and convincing assessed at P3,150.00 according to Tax Dec. No. 006-317; evidence such specific acts that vitiated a party’s consent, otherwise, the latter’s presumed consent to the contract prevails. Commercial building erected on Parcel I above-described; and residential building erected just at the back of the commercial building above- The instant petition for review seeks to set aside the September 26, 2000 described and erected on Parcel I above-described; Decision of the Court of Appeals in CA-G.R. CV No. 48956, affirming in toto the Decision of the Regional Trial Court of Dipolog City, Branch 6, in Civil Parcel I, Lot No. 653, is the paraphernal property of Filomena Almirol de Case No. 4240 which declared, inter alia, the questioned Deed of Donation Sevilla which she co-owned with her sisters, Honorata Almirol and Felisa Inter Vivos valid and binding on the parties. Almirol, who were both single and without issue. Parcels II, II and IV are conjugal properties of Filomena Almirol de Sevilla and her late husband The undisputed facts reveal that on December 10, 1973, Filomena Almirol Andres Sevilla. When Honorata died in 1982, her 1/3 undivided share in Lot de Sevilla died intestate leaving 8 children, namely: William, Peter, No. 653 was transmitted to her heirs, Felisa Almirol and the heirs of Leopoldo, Felipe, Rosa, Maria, Luzvilla, and Jimmy, all surnamed Sevilla. Filomena Almirol de Sevilla, who thereby acquired the property in the William, Jimmy and Maria are now deceased and are survived by their proportion of one-half share each. respective spouses and children. Filomena Almirol de Sevilla left the following properties: During the lifetime of Felisa and Honorata Almirol, they lived in the house of Filomena Almirol de Sevilla, together with their nephew, respondent PARCEL I: Leopoldo Sevilla and his family. Leopoldo attended to the needs of his mother, Filomena, and his two aunts, Honorata and Felisa. A parcel of land known as Lot No. 653 situated at General Luna St., Dipolog City, with an area of about 804 square meters, more or less, duly covered Felisa died on July 6, 1988. Previous thereto, on November 25, 1985, she by Transfer Certificate of Title No. (T-6671)-1448 [in the name of Filomena executed a last will and testament devising her 1/2 share in Lot No. 653 to Almirol de Sevilla, Honorata Almirol and Felisa Almirol] and assessed at the spouses Leopoldo Sevilla and Belen Leyson. On August 8, 1986, Felisa P31,360.00 according to Tax Dec. No. 018-947; executed another document denominated as “Donation Inter Vivos” ceding to Leopoldo Sevilla her 1/2 undivided share in Lot No. 653, which was PARCEL II: accepted by Leopoldo in the same document. On September 3, 1986, Felisa Almirol and Peter Sevilla, in his own behalf 2) Declaring the questioned Deed of Extra-Judicial Partition as and in behalf of the heirs of Filomena Almirol de Sevilla, executed a Deed unenforceable as yet as against the other heirs, as it lacks the legal of Extra-judicial Partition, identifying and adjudicating the 1/3 share of requisites of Special Power of Attorney or any other appropriate instrument Honorata Almirol to the heirs of Filomena Almirol de Sevilla and to Felisa to be executed by the other heirs who were not made parties thereto; Almirol. 3) Finding the parties herein entitled to the partition of Parcel II, III, IV as Thereafter, respondents Leopoldo, Peter and Luzvilla Sevilla obtained the designated in the Complaint, in equal shares, and, as to Lot No. 653 cancellation of Transfer Certificate of Title No. (T-6671)-1448, over Lot No. designated as Parcel I, it shall be divided equally into two, between 653, and the issuance of the corresponding titles to Felisa Almirol and the defendant Leopoldo Sevilla on one hand, and, collectively, the Heirs of heirs of Filomena Almirol de Sevilla. However, the requested titles for Lot William Sevilla, Heirs of Jimmy Sevilla, Heirs of Maria Sevilla, Felipe Sevilla, Nos. 653-A and 653-B, were left unsigned by the Register of Deeds of Leopoldo Sevilla, Peter Sevilla, Luzvilla Sevilla-Tan, on the other hand, as Dipolog City, pending submission by Peter Sevilla of a Special Power of well as the two buildings thereon in proportionate values; Attorney authorizing him to represent the other heirs of Filomena Almirol de Sevilla. 4) Directing the parties, if they can agree, to submit herewith a project of partition, which shall designate the share which pertains to the heirs On June 21, 1990, Felipe Sevilla, Rosa Sevilla, and the heirs of William, entitled thereto, that is, the particular and specific portions of the Jimmy and Maria, all surnamed Sevilla, filed the instant case against properties subject of the partition; respondents Leopoldo Sevilla, Peter Sevilla and Luzvilla Sevilla, for annulment of the Deed of Donation and the Deed of Extrajudicial Partition, 5) Directing defendant Peter Sevilla to pay and/or collect from the Accounting, Damages, with prayer for Receivership and for Partition of the parties the amounts corresponding to each one entitled or liable thereto, properties of the late Filomena Almirol de Sevilla. They alleged that the as recorded in the Statement of Accounts, except for defendant Leopoldo Deed of Donation is tainted with fraud because Felisa Almirol, who was Sevilla who is found by the Court to have incurred only an overdraft of then 81 years of age, was seriously ill and of unsound mind at the time of P5,742.98 and not P33,204.33 as earlier computed therein. the execution thereof; and that the Deed of Extra-judicial Partition is void because it was executed without their knowledge and consent. 6) Dismissing the plaintiffs’ claim for damages, which is not proved with sufficient evidence, and defendants’ counterclaim, on the same ground. In their answer, respondents denied that there was fraud or undue pressure in the execution of the questioned documents. They alleged that 7) With costs de oficio. Felisa was of sound mind at the time of the execution of the assailed deeds and that she freely and voluntarily ceded her undivided share in Lot No. 653 in consideration of Leopoldo’s and his family’s love, affection, and IT IS SO ORDERED. services rendered in the past. Respondents further prayed that Parcels II, III, and IV be partitioned among the heirs of Filomena Almirol de Sevilla in Both parties appealed to the Court of Appeals. Petitioners contended that accordance with the law on intestate succession. the Deed of Donation should be declared void and that Lot No. 653 should be divided equally among them. Respondents, on the other hand, posited On December 16, 1994, a decision was rendered by the Regional Trial that the trial court erred in declaring the Deed of Extra-judicial Partition Court of Dipolog City, Zamboanga del Norte, Branch 6, upholding the unenforceable against the other heirs of Filomena Almirol de Sevilla who validity of the Deed of Donation and declaring the Deed of Extra-judicial were not parties to said Deed. Partition unenforceable. The dispositive portion thereof, reads: On September 26, 2000, the Court of Appeals affirmed in toto the assailed WHEREFORE, IN VIEW OF THE FOREGOING, summing up the evidence for decision of the trial court. Petitioners filed a motion for reconsideration but both the plaintiffs and the defendants, the Court hereby renders judgment: the same was denied on August 30, 2001.

1) Declaring the questioned Deed of Donation Inter Vivos valid and Hence, the instant petition based on the following assignment of errors: binding, and, therefore, has the full force and effect of law; THAT THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING AS B. That the old woman Felisa Almirol was being supported out of the VOID AB INITIO THE DEED OF DONATION EXCUTED BY FELISA ALMIROL IN rentals derived from the building constructed on the land which was a FAVOR OF RESPONDENT LEOPOLDO SEVILLA CEDING TO HIM ONE HALF common fund…. PORTION OF LOT 653, DIPOLOG CADASTRE, IT HAVING BEEN EXECUTED WITH FRAUD, UNDUE PRESSURE AND INFLUENCE; C. That when Felisa Almirol was already 82 years old, he [Leopoldo Sevilla] accompanied her in the Office of Atty. Vic T. Lacaya, Sr., for the THAT THE APPELLATE COURT GREATLY ERRED IN NOT ORDERING THE purpose of executing her last will and testament… PARTITION OF LOT 653, DIPOLOG CADASTRE EQUALLY AMONG THE EIGHT (8) HEIRS OF FILOMENA, HONORATA AND FELISA, ALL SURNAMED D. That in the last will and testament executed by Felisa Almirol, she ALMIROL. had devised in favor of respondent Leopoldo Sevilla one-half of the land in question; To resolve the issue raised in the instant petition for review, the validity of the donation inter vivos executed by Felisa Almirol in favor of Leopoldo E. That respondent Leopoldo Sevilla not contented with the execution Sevilla must first be determined. by Felisa Almirol of her last will and testament, had consulted a lawyer as to how he will be able to own the land immediately; Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another who accepts it. Under Article 737 of the F. That upon the advice of Atty. Helen Angeles, Clerk of Court of the Civil Code, the donor’s capacity shall be determined as of the time of the Regional Trial Court of Zamboanga del Norte, Dipolog City, Felisa Almirol making of the donation. Like any other contract, an agreement of the executed a Deed of Donation, hence, the questioned Deed of Donation parties is essential, and the attendance of a vice of consent renders the executed in his favor; donation voidable. G. That the subject matter of the Deed of Donation was the one-half In the case at bar, there is no question that at the time Felisa Almirol portion of Lot 653, Dipolog Cadastre, which was willed by Felisa Almirol, in executed the deed of donation she was already the owner of 1/2 undivided favor of respondent Leopoldo Sevilla in her last will and testament; portion of Lot No. 653. Her 1/3 undivided share therein was increased by 1/2 when she and Filomena inherited the 1/3 share of their sister Honorata H. That at the time of the execution of the Deed of Donation, Lot No. after the latter’s death. Hence, the 1/2 undivided share of Felisa in Lot No. 653, Dipolog Cadastre, was not yet partitioned between petitioners and 653 is considered a present property which she can validly dispose of at respondents they being heirs of the late Filomena and Honorata, all the time of the execution of the deed of donation. surnamed Almirol;

Petitioners, however, insist that respondent Leopoldo Sevilla employed I. That after the execution of the Deed of Donation, respondent Peter fraud and undue influence on the person of the donor. This argument Sevilla and the late Felisa Almirol were the only ones who executed the involves appreciation of the evidence. The settled rule is that factual Deed of Extra-judicial Partition over Lot 653, Dipolog Cadastre, the findings of the trial court, if affirmed by the Court of Appeals, are entitled petitioners were not made parties in the said Deed of Extrajudicial to great respect. There are exceptional circumstances when findings of Partition; fact of lower courts may be set aside but none is present in the case at bar. Indeed, neither fraud nor undue influence can be inferred from the following circumstance alleged by the petitioners, to wit – J. That on the basis of the Deed of Extrajudicial Partition and Deed of Donation, respondent Leopoldo Sevilla caused the subdivision survey of Lot 653, Dipolog Cadastre, dividing the same into two (2) lots, adjudicating A. That Felisa Almirol lived with respondent Leopoldo Sevilla in the one-half of the lot in his favor and the other half in favor of respondents residential house owned by petitioners and respondents; peter Sevilla and Luzvilla Sevilla, and to respondent Leopoldo Sevilla himself; K. That only two persons knew the actual survey of the land, petitioner Clearly, therefore, the courts below did not err in sustaining the validity of Felipe Sevilla and respondent Leopoldo Sevilla himself, the rest of the co- the deed of donation. owners were not even notified; Anent the Deed of Extra-judicial Partition, we find that the same is void ab L. That on the basis of the Extrajudicial Partition, Deed of Donation, the initio and not merely unenforceable. In Delos Reyes v. Court of Appeals, approved subdivision plan, respondent Leopoldo Sevilla filed a petition for which is a case involving the sale of a lot by a person who is neither the issuance of the corresponding titles for the two lots, but the Register of owner nor the legal representative, we declared the contract void ab initio. Deeds of Dipolog City refused to issue the corresponding titles for the two It was held that one of the requisites of a valid contract under Article 1318 lots to respondent Leopoldo Sevilla so that up to this moment … the two of the Civil Code is the consent and the capacity to give consent of the tiles were left unsigned by the Register of Deeds. parties to the contract. The legal capacity of the parties is an essential element for the existence of the contract because it is an indispensable There is fraud when, through the insidious words or machinations of one of condition for the existence of consent. There is no effective consent in law the contracting parties, the other is induced to enter into a contract which, without the capacity to give such consent. In other words, legal consent without them, he would not have agreed to. There is undue influence when presupposes capacity. Thus, there is said to be no consent, and a person takes improper advantage of his power over the will of another, consequently, no contract when the agreement is entered into by one in depriving the latter of a reasonable freedom of choice. The following behalf of another who has never given him authorization therefor unless he circumstances shall be considered: the confidential, family, spiritual and has by law a right to represent the latter. other relations between the parties, or the fact that the person alleged to have been unduly influenced was suffering from mental weakness, or was In the case at bar, at the time Felisa executed the deed of extra-judicial ignorant or in financial distress. partition dividing the share of her deceased sister Honarata between her and the heirs of Filomena Almirol de Sevilla, she was no longer the owner Ei incumbit probatio qui dicit, non qui negat. He who asserts, not he who of the 1/2 undivided portion of Lot No. 653, having previously donated the denies, must prove. We have consistently applied the ancient rule that if same to respondent Leopoldo Sevilla who accepted the donation in the the plaintiff, upon whom rests the burden of proving his cause of action, same deed. A donation inter vivos, as in the instant case, is immediately fails to show in a satisfactory manner facts on which he bases his claim, operative and final. As a mode of acquiring ownership, it results in an the defendant is under no obligation to prove his exception or defense. In effective transfer of title over the property from the donor to the donee the instant case, the self-serving testimony of the petitioners are vague on and the donation is perfected from the moment the donor knows of the what acts of Leopoldo Sevilla constituted fraud and undue influence and on acceptance by the donee. And once a donation is accepted, the donee how these acts vitiated the consent of Felisa Almirol. Fraud and undue becomes the absolute owner of the property donated. influence that vitiated a party’s consent must be established by full, clear and convincing evidence, otherwise, the latter’s presumed consent to the Evidently, Felisa did not possess the capacity to give consent to or execute contract prevails. Neither does the fact that the donation preceded the the deed of partition inasmuch as she was neither the owner nor the partition constitute fraud. It is not necessary that partition should first be authorized representative of respondent Leopoldo to whom she previously had because what was donated to Leopoldo was the 1/2 undivided share of transmitted ownership of her undivided share in Lot No. 653. Considering Felisa in Lot No. 653. that she had no legal capacity to give consent to the deed of partition, it follows that there is no consent given to the execution of the deed, and Moreover, petitioners failed to show proof why Felisa should be held therefore, there is no contract to speak of. As such, the deed of partition is incapable of exercising sufficient judgment in ceding her share to void ab initio, hence, not susceptible of ratification. respondent Leopoldo. As testified by the notary public who notarized the Deed of Donation, Felisa confirmed to him her intention to donate her Nevertheless, the nullity of the deed of extra-judicial partition will not share in Lot No. 653 to Leopoldo. He stressed that though the donor was affect the validity of the donation inter vivos ceding to respondent old, she was of sound mind and could talk sensibly. Significantly, there is Leopoldo Sevilla the 1/2 undivided share of Felisa Almirol in Lot No. 653. nothing in the record that discloses even an attempt by petitioners to rebut Said lot should therefore be divided as follows: 1/2 shall go to respondent said declaration of the notary public. Leopoldo Sevilla by virtue of the deed of donation, while the other half shall be divided equally among the heirs of Filomena Almirol de Sevilla It appears from the evidence that the plaintiff and the defendant Felix including Leopoldo Sevilla, following the rules on intestate succession. Cagaoan are brothers, the sons of Gregorio Cagaoan. On November 3, 1915, Gregorio Cagaoan executed a deed of gift of four parcels of land Finally, we note that the name of Rosa Sevilla, daughter of Filomena situated in the municipality of Tayug, Province of Pangasinan, in favor of Almirol de Sevilla, and one of the plaintiffs herein, was omitted in the Felix Cagaoan and on October 26, 1918, he executed a similar deed in dispositive portion of the trial court’s decision. Her name should therefore favor of Eugenio Cagaoan for a parcel of land which, apparently, is the be included in the dispositive portion as one of the heirs entitled to share same as that described as parcel No. 4 in the deed of gift executed in favor in the properties of the late Filomena Almirol de Sevilla. of Felix. Both of the deeds of gift are free from formal defects and were duly accepted by the donees. WHEREFORE, in view of all the foregoing, the Decision of the Court of Appeals in CA-G.R. CV No. 48956, affirming in toto the Decision of the Eugenio Cagaoan went into possession of the parcel donated to him Regional Trial Court of Dipolog City, Branch 6, in Civil Case No. 4240, is immediately after the execution of the deed of gift in his favor, but on AFFIRMED with MODIFICATION. The Deed of Extra-judicial Partition dated account of variance between the land description given in the deed and September 3, 1986 is declared void, and the name of Rosa Sevilla is that appearing in the registry, he failed to get the donation recorded with ordered included in the dispositive portion of the trial court’s judgment. the register of deeds. The deed given Felix was duly recorded on June 10, 1919, but though he appears to have held possession of parcels Nos. 1,2, SO ORDERED. and 3 described in his deed, at least since the year 1915, he has never had possession of parcel No. 4. Gregorio Cagaoan died on December 16, 1918. Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur. This action was brought to have Eugenio Cagaoan declared the owner of the parcel donated to him, to set aside for fraud the donation made in * Also spelled as Alili in the Petition. favor of Felix Cagaoan and to have the record of the same in the registry of deeds cancelled. The defendant Felix Cagaoan has presented cross- ** Also spelled as Anggie in the Petition. complaint asking that he awarded the possession of the land, with damages for its unlawful detention by the plaintiff. Republic of the Philippines SUPREME COURT The trial court rendered judgment for the defendant ordering that the Manila plaintiff surrender possession of the parcel in question to him and pay the costs. From this judgment the plaintiff appealed. EN BANC There is no doubt that Gregorio Cagaoan signed both of the deeds of gift G.R. No. L-17900 June 21, 1922 by means of his thumb-print and that therefore both of them are authentic, but there are strong indications in the evidence that some form of EUGENIO CAGAOAN, plaintiff-appellant, deception was practiced upon him at the time of the execution of the deed vs. in favor of Felix Cagaoan and that he never intended to donate the parcel FELIX CAGAOAN and the REGISTER OF DEEDS OF THE PROVINCE OF now in dispute to Felix. In fact, in view of the difficulty of obtaining direct PANGASINAN, defendants-appellees. evidence of fraud where the person deceived cannot be produced as witness, we might, perhaps be justified in holding that the circumstances E. G. Turner for plaintiff-appellant. shown by the evidence and which remain unexplained by the defendant, C. W. Rheberg for defendant-appellee. constitute sufficient evidence of fraud. But, be this as tit may, we think the judgment of the court below must be reversed for another reason. The case seems to use to be analogous to one where the same real property OSTRAND, J.: has been sold by the same vendor to two difference vendees. In such cases, under article 1473 of the Civil Code, the property goes to the vendee who first records his title in the registry of property. If the sale is not recorded by either vendee, the property goes to the one who first Republic of the Philippines takes possession of its in good, faith, and in the absence of both record SUPREME COURT and possession, to the one who present oldest title, provided there is good Manila faith. EN BANC The supreme court of Spain has frequently held that inscription in the registry of property gives no preference of priority where the person G.R. No. L-17863 June 26, 1922 relying on the inscription had full notice beforehand of the adverse claim. For instance, in sentence of July 9, 1900, the court held that "the provision CENON FERNANDEZ plaintiff-appellant, of article 34 of the Mortgage Law presuppose that the cause of annulment vs. or resolution of the right of the obligor which is not recorded in the CESAR MERCADER and ISABEL NOEL, defendants-appellants. property registry were unknown to the obligee at the time of contracting, BROADWELL HAGANS, intervenor-appellant. because if the latter knew those causes, he did not have the character of a third person, and the basis of that legal fiction upon which the guaranty of registry rests was lacking." Del Rosario and Del Rosario for plaintiff-appellant. Jose A. Clarin for defendants-appellants. Block, Johnston and Greenbaum for intervenor-appellant. In sentence of May 123, 1908, it was held that "although article 1473, in its second paragraph, creates a preference for the title of ownership of realty first registered, this provision must be understood as being based always OSTRAND, J.: upon the good faith required in the first paragraph thereof, and it cannot be conceived that the legislator had intended to do away with, or to This is an action for the partition of three parcels of and, referred to in the sanction, bad faith by requiring compliance with a mere formality (the act complaint as parcels (a), (b) and (c), and some carabaos, the plaintiffs of registration) which does not always control even when third persons are alleging that he property he seeks to have partitioned is owned by him in involved." (See also Obras Pias vs. Devera Ignacio, 17 Phil., 45.) common with the defendants Mercader and Noel under an agreement with the latters predecessor in interest Juan Melgar. Broadwell Hagans, the It clearly appears that Felix Cagaoan had full notice of the plaintiff's claim administrator of the estate of Juan Melgar, is also made a defendant in the to the land before he had his deed of gift recorded with the register of proceedings. The defendants Mercader and Noel deny generally the deeds. Under the decisions above cited he was therefore not a third person allegations of the complaint, set up as a special defense that they have within the meaning of article 34 of the Mortgage Law, and his position was, acquired title in fee simple to the entire property through a donation made consequently, in now wise improved by the inscription of his document. by Juan Melgar and his wife Vicente Escio, in their favor, and present a The plaintiff Eugenio Cagaoan having first taken possession in good faith counterclaim for the sum of P10,000 by way of damages for the illegal must therefore be considered to have the better right to the land in detention of the property by the plaintiff. question. The trial court rendered judgment holding that parcel (a) described in the The judgment appealed from is therefore reversed, the plaintiff Eugenio complaint was the exclusive property of the defendants Mercader and Noel Cagaoan is declared the owner of the land in question, the cross-complaint and not subject to partition; that the carabaos were owned in common by of the defendant Felix Cagaoan is dismissed, and it is ordered that the the plaintiff and the defendants Mercader and Noel and should be register of deeds cancel the inscription of The land in question in the name partitioned among them; that parcels (b) and (c) were owned jointly by the of Felix Cagaoan, who will pay the costs of this action in both instances. So plaintiff should pay rent in the sum of P500 to the defendants Mercader Ordered. and Noel for the use of parcel (a) and the sum of P250 for the use of their share of the carabaos, and that he should render an accounting of the products of parcels (b) and (c) to the estates of Juan Melgar and Vicenta Araullo, C.J., Malcolm, Avanceña, Villamor, Johns and Romualdez, JJ., Escio, represented by Broadwell Hagans. concur. From this judgment all the parties appealed, but the appeal of Mercader 5. Whereas in the barrio of Basak there are good business and Noel has been abandoned; the appeal of Broadwell Hagans as prospects such as the establishing of fisheries, manufacture of administrator of the estates of Juan Melgar and Vicenta Escio has been fishing nets and dragnets, we have also agreed that the dismissed; and only the appeal of the plaintiff remains for our partnership enter upon these activities of which Mr. Fernandez consideration. This appeal relates only to parcel (a) and to the award of shall also be the manager; rent for said related parcel and for the carabaos. 6. We have also agreed that if in the said barrio of Basak there are It appears from the evidence that on February 13, 1904, the plaintiff and other good business enterprises, such as the purchase and sale of Juan Melgar entered into the following agreement in writing: any merchandise, that the partnership also enter upon such ventures; We the undersigned, have mutually agreed to enter into the following, contract: 7. The conditions governing the partnership over these lands, fisheries and business, shall be as follows: 1. Mr. Juan Melgar, married, of legal age, resident of the municipality of Dumanjug, Province of Cebu, Philippine Islands; Mr. That if, by the grace of God, there shall be products or utilities from Cenon Fernandez, of legal age, resident of the municipality of the said business, they shall be divided among the partners as Barili, Province of Cebu, P.I.; they shall also bear, in equal parts, the losses, if any there be.

2. That we have entered into a partnership to take over a piece of 8. And finally we have agreed that each of us shall have a copy of land owned by Mr. Juan Melgar, situated in the barrio of Basak, the document that we have signed in the presence of witnesses in within the municipality of Guijuiñgan, Oriental Negros, Province of the act of the execution of this contract of partnership, the Dumaguete, Philippine Islands, the boundaries of which and area witnesses being Messrs. Vicente Lozada, Rafael Vinlot, Damaso appear in the documents of purchase from Mr. Pedro Macalua and Tapia, and Modesto Espenoso. are also stated in the possessory information and which land has been taken over the partnership, one-half of it belonging to Mr. Dumanjug, February 13, 1904. Fernandez in consideration of the amount of one thousand four (Sgd.) JUAN MELGAR, hundred two pesos and fifty centavos (P1,402.50) including herein DAMASO TAPIA, eight (8) heads of carabaos, five (5) males and three (3) females; MODESTO ESPESOSO.

3. We, Juan Melgar and Cenon Fernandez, have purchased ten (10) (Sgd.) CENON FERNANDEZ, carabaos and some lands planted with coconuts from Mr. Ciriaco RAFAEL VINLOT. Mangubat, these lands are situated in the barrio of San Nicolas within the municipality of Guijulñgan, Oriental Negros, Province of The land mentioned in paragraph 2 of the foregoing documents is parcel Dumaguete, Philippine Islands. All of which we have bought for the (a) of the complaint and is the land now in dispute between the plaintiff sum of one thousand four hundred and sixty pesos (P1,460), the and the defendants Mercader and Noel. Shortly after the agreement was boundaries of the land being stated in the document of sale which entered into, parcels (b) and (c) were acquired by the partnership and paid is made a part of this contract of partnership; for by Melgar and the plaintiff in equal shares.

4. We have agreed that all of the lands pertaining to this The evidence shows affirmatively that the plaintiff made the payment partnership shall be administered by Mr. Fernandez, without any required of him buy the contract and that he faithfully complied with its compensation, and he shall give an accounting of his terms during the life of Juan Melgar. administration to his copartner for his approval; The plaintiff and his son, Primitivo Fernandez, managed the partnership person who though he did not take any part in the act or contract, property and rendered accounts from time to time to Melgar of his share of nevertheless had full knowledge thereof." the profits until his death of 1915. In sentence of May 13, 1908, it was again held that "although article 1473, On March 6, 1915, Juan Melgar and his wife Vicenta Escio executed a deed in its second paragraph, creates a preference for the title of ownership of of gift of parcel (a), together with the work animals "which at present exist realty first registered, this provision must be understood as being based on the land" in favor of Cesar Mercader and his wife Isabel Noel. The always upon the good faith required in the first paragraph thereof, as it document is free from formal defects and the donation was duly accepted cannot be conceived that the legislator had intended to do always with, or by the donees. It was recorded in the Mortgage Law Registry on August 7, to sanction, bad faith by requiring compliance with a mere formality (the 1915. Juan Melgar died on June 19, 1915, but as early as in the month of act of registration) which does not always control even when third person May of the same year Mercader had a conversation with Cenon Fernandez are involved." (See also Obras Pias vs. Devera Ignacio, 17 Phil., 45.) and as a result of the conversation agreed in writing to continue the partnership between Fernandez and Melgar under the new name of We have no doubt whatever that Mercader had full notice for the claim of Mercader-Fernandez. Cenon Fernandez to the property in question before the donation was recorded. He is the grandson of Juan Melgar, was in intimate relations with A number of questions have been presented by the assignments of error him, and the interest of Cenon Fernandez in the Basak property appear to and the discussion has taken a wide range, but from our point of view the have been quite generally known. True, Mercader testifies that he was problem offered may be reduced to very simple terms. The character of under the impression that Fernandez was merely an industrial partner in the partnership between Melgar and Fernandez, and whether it was the management of the property, but to this statement we can, in the properly formed, may be open to question, but there can be no doubt that circumstances, give no credence. If the statement were true, he would under the agreement made by Fernandez he acquired, as between him hardly have agreed to give Fernandez one-half of the net profits for merely and Melgar, the ownership of an undivided one-half of the property of the overseeing the cultivation of the land. What has been said in regard to partnership and he could, at any time, have compelled Melgar to execute a Mercader applies with equal force to his wife, who is also a grandchild of proper conveyance of a one-half interest in the land now in dispute. Melgar and whose relation with her grandparents appear to have been equally close judging from the recitals in the deed of gift above mentioned. When Melgar executed the deed of gift in favor of Mercader and the latter's wife, he was the owner of only an undivided one-half of the land We therefore hold that the defendant Mercader and his wife are not third and that was all he could legally convey to the donees. Unless, therefore, person within the meaning of article 34 of the Mortgage Law; that their the recording of the deed of gift with the register of deeds has cut off the position was not improved by the recording of their title in the registry of rights of Fernandez in accordance with article 34 of the Mortgage Law, deeds; and that they merely stand in the shoes of Juan Melgar as the Mercader and his wife have only acquired a one-half interest in the land. owners of a half-interest in the land in question.

That the protection afforded third persons by article 34 of the Mortgage The rent allowed the defendant Mercader and Noel by the trial court is for Law is subject to limitations and is not absolute of is well settled. The the use of the land and carabaos by the plaintiff during the year 1916 supreme court of Spain in sentence of July 9, 1900, held that "the when he failed to account to the defendant Mercader for the profits of the provisions of article 34 of the Mortgage Law presuppose that the causes of partnership. The findings of the court on this point were based on the annulment or resolution of the right of the obligor which is not recorded in assumption that Mercader and his wife were the sole owners of parcel (a) the property registry were unknown to the obligee at the time of As they own only one-half interest in the parcel, the rent allowed by the contracting because if the latter knew those causes, he did not have the court below for the land must be reduced by one-half. character of a third person, and the basis of that legal fiction upon which the guaranty of registry rests was lacking." The judgment appealed from is therefore modified in the part thereof which relates to parcel (a) described in the complaint and it is ordered that In sentence of May 13, 1903, it was held that "there cannot be any doubt said parcel be partitioned as prayed for in the plaintiff's complaint, one-half but that in accordance with said law a party cannot be considered a third thereof to be assigned to Cenon Fernandez and the other half to be assigned to the spouses Cesar Mercader and Isabel Noel jointly. The amount to be paid by Cenon Fernandez as rent for the land is reduced from On 10 December 1981 Helen executed a Quitclaim Deed assigning, P500 to P250. It is further order that the inscription of parcel (a) in the transferring and conveying to her son David her undivided one-half (1/2) registry of deeds in the names of Cesar Mercader and Isabel Noel be interest on all the parcels of land subject matter of the Deed of cancelled. In all other respects the judgment appealed from is affirmed. Extrajudicial Settlement of the Estate of Simeon Guzman. Since the The defendant Mercader will pay the costs of this instance. So ordered. document appeared not to have been registered, upon advice of Atty. Lolita G. Abela, Helen executed another document, a Deed of Quitclaim, on Araullo, C.J., Malcolm, Avanceña, Villamor, Johns and Romualdez, JJ., 9 August 1989 confirming the earlier deed of quitclaim as well as concur. modifying the document to encompass all her other property in the Philippines. SECOND DIVISION On 18 October 1989 David executed a Special Power of Attorney where he [G.R. No. 132964. February 18, 2000] acknowledged that he became the owner of the parcels of land subject of the Deed of Quitclaim executed by Helen on 9 August 1989 and empowering Atty. Lolita G. Abela to sell or otherwise dispose of the lots. On REPUBLIC OF THE PHILIPPINES, petitioner, vs. DAVID REY 1 February 1990 Atty. Lolita G. Abela, upon instruction of Helen, paid GUZMAN, represented by his Attorney-in-Fact, LOLITA G. ABELA, donor’s taxes to facilitate the registry of the parcels of land in the name of and the REGISTER OF DEEDS OF BULACAN, MEYCAUAYAN BRANCH, David. respondents. On 16 March 1994 a certain Atty. Mario A. Batongbacal wrote the Office of D E C I S I O N the Solicitor General and furnished it with documents showing that David’s ownership of the one-half (1/2) of the estate of Simeon Guzman was BELLOSILLO, J.: defective. On the basis thereof, the Government filed before the Regional Trial Court of Malolos Bulacan a Petition for Escheat praying that one-half The REPUBLIC OF THE PHILIPPINES seeks the nullification of the 5 March (1/2) of David's interest in each of the subject parcels of land be forfeited 1998 Decision of the Court of Appeals which affirmed the dismissal by the in its favor. On 9 August 1994 David Rey Guzman responded with a prayer Regional Trial Court, Br. 77, Malolos, Bulacan, of the petition for escheat that the petition be dismissed. Sppedsc filed by the Government. Â h Y On 11 July 1995 the trial court dismissed the petition holding that the two David Rey Guzman, a natural-born American citizen, is the son of the (2) deeds of quitclaim executed by Helen Meyers Guzman had no legal spouses Simeon Guzman, a naturalized American citizen, and Helen force and effect so that the ownership of the property subject thereof Meyers Guzman, an American citizen. In 1968 Simeon died leaving to his remained with her. sole heirs Helen and David an estate consisting of several parcels of land located in Bagbaguin, Sta. Maria, Bulacan, covered by TCT Nos. T-146837 The Government appealed the dismissal of the petition but the appellate (M), T-146839 (M), T-146840 (M), T- 146841 (M), T-146842 (M), T-120254 court affirmed the court a quo. (M) and T-120257 (M). Petitioner anchors its argument on Art. XII of the Constitution which On 29 December 1970 Helen and David executed a Deed of Extrajudicial provides - Settlement of the Estate of Simeon Guzman dividing and adjudicating to themselves all the property belonging to the estate of Simeon. The Sec. 7. Save in cases of hereditary succession, no private document of extrajudicial settlement was registered in the Office of the lands shall be transferred or conveyed except to Register of Deeds on 8 December 1971. The taxes due thereon were paid individuals, corporations, or associations qualified to through their attorneys-in-fact, Attys. Juan L. Austria and Lolita G. Abela, acquire or hold lands of the public domain. and the parcels of land were accordingly registered in the name of Helen Meyers Guzman and David Rey Guzman in undivided equal shares. Sec. 8. Notwithstanding the provisions of Section 7 of this However, Helen’s intention to perform an act of liberality in favor of David Article, a natural-born citizen of the Philippines who has was not sufficiently established. A perusal of the two (2) deeds of quitclaim lost his Philippine citizenship may be a transferee of reveals that Helen intended to convey to her son David certain parcels of private lands, subject to limitations provided by law. land located in the Philippines, and to re-affirm the quitclaim she executed in 1981 which likewise declared a waiver and renunciation of her rights Thus as a rule, only a Filipino citizen can acquire private lands in the over the parcels of land. The language of the deed of quitclaim is clear that Philippines. The only instances when a foreigner can acquire private lands Helen merely contemplated a waiver of her rights, title and interest over in the Philippines are by hereditary succession and if he was formerly a the lands in favor of David, and not a donation. That a donation was far natural-born Filipino citizen who lost his Philippine citizenship. Petitioner from Helen's mind is further supported by her deposition which indicated therefore contends that the acquisition of the parcels of land by David does that she was aware that a donation of the parcels of land was not possible not fall under any of these exceptions. It asserts that David being an since Philippine law does not allow such an arrangement. She reasoned American citizen could not validly acquire one-half (1/2) interest in each of that if she really intended to donate something to David it would have the subject parcels of land by way of the two (2) deeds of quitclaim as they been more convenient if she sold the property and gave him the proceeds are in reality donations inter vivos. It also reasons out that the elements of therefrom. It appears that foremost in Helen’s mind was the preservation donation are present in the conveyance made by Helen in favor of David: of the Bulacan realty within the bloodline of Simeon from where they first, Helen consented to the execution of the documents; second, the originated, over and above the benefit that would accrue to David by dispositions were made in public documents; third, David manifested his reason of her renunciation. The element of animus donandi therefore was acceptance of the donation in the Special Power of Attorney he executed in missing. favor of Atty. Lolita G. Abela; fourth, the deeds were executed with the intention of benefiting David; and lastly, there was a resultant decrease in Likewise, the two (2) deeds of quitclaim executed by Helen may have been the assets or patrimony of Helen, being the donor. Petitioner further in the nature of a public document but they lack the essential element of argues that the payment of donor’s taxes on the property proved that acceptance in the proper form required by law to make the donation valid. Helen intended the transfer to be a gift or donation inter vivos. We find no merit in petitioner’s argument that the Special Power of Attorney executed by David in favor of Atty. Lolita G. Abela manifests his David maintains, on the other hand, that he acquired the property by right implied acceptance of his mother’s alleged donation as a scrutiny of the of accretion and not by way of donation, with the deeds of quitclaim document clearly evinces the absence thereof. The Special Power of merely declaring Helen’s intention to renounce her share in the property Attorney merely acknowledges that David owns the property referred to and not an intention to donate. He further argues that, assuming there was and that he authorizes Atty. Abela to sell the same in his name. There is no indeed a donation, it never took effect since the Special Power of Attorney intimation, expressly or impliedly, that David’s acquisition of the parcels of he executed does not indicate acceptance of the alleged donation. Calrsc land is by virtue of Helen’s possible donation to him and we cannot look beyond the language of the document to make a contrary construction as There are three (3) essential elements of a donation: (a) the reduction of this would be inconsistent with the parol evidence rule. the patrimony of the donor; (b) the increase in the patrimony of the donee; and, (c) the intent to do an act of liberality or animus donandi. When Moreover, it is mandated that if an acceptance is made in a separate applied to a donation of an immovable property, the law further requires public writing the notice of the acceptance must be noted not only in the that the donation be made in a public document and that there should be document containing the acceptance but also in the deed of donation. an acceptance thereof made in the same deed of donation or in a separate Commenting on Art. 633 of the Civil Code from whence Art. 749 came public document. In cases where the acceptance is made in a separate Manresa said: "If the acceptance does not appear in the same document, it instrument, it is mandated that the donor should be notified thereof in an must be made in another. Solemn words are not necessary; it is sufficient authentic form, to be noted in both instruments. if it shows the intention to accept x x x x it is necessary that formal notice thereof be given to the donor, and the fact that due notice has been given Not all the elements of a donation of an immovable property are present in must be noted in both instruments. Then and only then is the donation the instant case. The transfer of the property by virtue of the Deed of perfected. " Quitclaim executed by Helen resulted in the reduction of her patrimony as donor and the consequent increase in the patrimony of David as donee. Thus, in Santos v. Robledo we emphasized that when the deed of donation eleven (11) years after she had accepted the inheritance have no legal is recorded in the registry of property the document that evidences the force and effect. acceptance - if this has not been made in the deed of gift - should also be recorded. And in one or both documents, as the case may be, the Nevertheless, the nullity of the repudiation does not ipso facto operate to notification of the acceptance as formally made to the donor or donors convert the parcels of land into res nullius to be escheated in favor of the should be duly set forth. Where the deed of donation fails to show the Government. The repudiation being of no effect whatsoever the parcels of acceptance, or where the formal notice of the acceptance made in a land should revert to their private owner, Helen, who, although being an separate instrument is either not given to the donor or else noted in the American citizen, is qualified by hereditary succession to own the property deed of donation, and in the separate acceptance, the donation is null and subject of the litigation. void. WHEREFORE, the assailed Decision of the Court of Appeals which These requisites, definitely prescribed by law, have not been complied sustained the Decision of the Regional Trial Court of Malolos, Bulacan, with, and no proof of compliance appears in the record. The two (2) dismissing the petition for escheat is AFFIRMED. No costs. quitclaim deeds set out the conveyance of the parcels of land by Helen in favor of David but its acceptance by David does not appear in the deeds, SO ORDERED. Sdjad nor in the Special Power of Attorney. Further, the records reveal no other instrument that evidences such acceptance and notice thereof to the donor in an authentic manner. It is well-settled that if the notification and Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concur. notation are not complied with, the donation is void. Therefore, the provisions of the law not having been complied with, there was no effective SECOND DIVISION conveyance of the parcels of land by way of donation inter vivos. Scncm [G.R. No. 155810. August 13, 2004] However, the inexistence of a donation does not render the repudiation made by Helen in favor of David valid. There is no valid repudiation of LYDIA SUMIPAT, LAURITO SUMIPAT, ALEJANDRO SUMIPAT, ALICIA SUMIPAT, inheritance as Helen had already accepted her share of the inheritance and LIRAFE SUMIPAT, petitioners, vs. BRIGIDO BANGA, HERMINIGILDO when she, together with David, executed a Deed of Extrajudicial TABOTABO, VIVIANO TABOTABO, BERNARDITA ANIÑON, and LEONIDA Settlement of the Estate of Simeon Guzman on 29 December 1970 dividing TABOTABO, respondents. and adjudicating between the two (2) of them all the property in Simeon’s estate. By virtue of such extrajudicial settlement the parcels of land were D E C I S I O N registered in her and her son’s name in undivided equal share and for eleven (11) years they possessed the lands in the concept of owner. Article TINGA, J.: 1056 of the Civil Code provides - This is a Petition for Review on Certiorari[1] of the Decision[2] of the Court The acceptance or repudiation of an inheritance, once of Appeals which reversed and set aside the decision[3] of the Regional made is irrevocable and cannot be impugned, except when Trial Court (RTC) and partially annulled the Deed of Absolute Transfer it was made through any of the causes that vitiate consent and/or Quitclaim (the deed) subject of this case. or when an unknown will appears. We quote the appellate court’s findings of fact: Nothing on record shows that Helen’s acceptance of her inheritance from Simeon was made through any of the causes which vitiated her consent nor is there any proof of the existence of an unknown will executed by The spouses Placida Tabo-tabo and Lauro Sumipat, who contracted Simeon. Thus, pursuant to Art. 1056, Helen cannot belatedly execute an marriage on July 20, 1939, acquired three parcels of land two of which instrument which has the effect of revoking or impugning her previous were covered by Original Certificate of Title No. P-17842 and Transfer acceptance of her one-half (1/2) share of the subject property from Certificate of Title No. T-15826. Simeon’s estate. Hence, the two (2) quitclaim deeds which she executed The couple was childless. The trial court found that the subject properties are conjugal having been acquired during the marriage of Lauro Sumipat and Placida Tabotabo Lauro Sumipat, however, sired five illegitimate children out of an extra- (Placida). However, because Placida failed to question the genuineness and marital affair with Pedra Dacola, namely: herein defendants-appellees due execution of the deed and even admitted having affixed her signature Lydia, Laurito, Alicia, Alejandro and Lirafe, all surnamed Sumipat. thereon, the trial court declared that the entirety of the subject properties, and not just Lauro Sumipat’s conjugal share, were validly transferred to the On January 5, 1983, Lauro Sumipat executed a document denominated defendants, the petitioners herein.[5] “DEED OF ABSOLUTE TRANSFER AND/OR QUIT-CLAIM OVER REAL PROPERTIES” (the assailed document) in favor of defendants-appellees On appeal,[6] the appellate court held that since Placida was unlettered,[7] covering the three parcels of land (the properties). On the document the appellees, the petitioners herein, as the parties interested in enforcing appears the signature of his wife Placida which indicates that she gave her the deed, have the burden of proving that the terms thereof were fully marital consent thereto. explained to her.[8] This they failed to do.

It appears that on January 5, 1983 when the assailed document was Under the Civil Code, a contract where consent is given through mistake, executed, Lauro Sumipat was already very sick and bedridden; that upon violence, intimidation, undue influence or fraud is voidable.[9] In order that defendant-appellee Lydia’s request, their neighbor Benjamin Rivera lifted mistake may invalidate consent, it should refer to the substance of the the body of Lauro Sumipat whereupon Lydia guided his (Lauro Sumipat’s) thing which is the object of the contract, or to those conditions which have hand in affixing his signature on the assailed document which she had principally moved one or both parties to enter into the contract.[10] brought; that Lydia thereafter left but later returned on the same day and requested Lauro’s unlettered wife Placida to sign on the assailed The appellate court found that Placida did not understand the full import of document, as she did in haste, even without the latter getting a responsive the deed because the terms thereof were not explained to her either by answer to her query on what it was all about. the petitioners or by the notary public before whom the deed was acknowledged. According to the appellate court, Judge Pacifico Garcia After Lauro Sumipat’s death on January 30, 1984, his wife Placida, (Judge Garcia), before whom the deed was acknowledged, did not identify hereinafter referred to as plaintiff-appellant, and defendants-appellees Placida as having appeared before him on January 5, 1983 to acknowledge jointly administered the properties 50% of the produce of which went to the deed. The jurat indicates that it was only Lauro Sumipat who appeared plaintiff-appellant. 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 As plaintiff-appellant’s share in the produce of the properties dwindled until impression that the deed conveyed the exclusive properties of Lauro she no longer received any and learning that the titles to the properties in Sumipat. Hence, he could not have explained to Placida that the deed question were already transferred/made in favor of the defendants- actually transferred the conjugal properties of Lauro Sumipat and Placida. appellees, she filed a complaint for declaration of nullity of titles, contracts, [11] partition, recovery of ownership now the subject of the present appeal. The Court of Appeals, therefore, annulled the deed insofar as it covers Defendant-appellee Lydia disclaims participation in the execution of the Placida’s conjugal share in the subject properties because the latter’s assailed document, she claiming to have acquired knowledge of its consent thereto was vitiated by mistake when she affixed her signature on existence only on January 10, 1983 or five days after its execution when the document. Lauro Sumipat gave the same to her. The petitioners filed a Motion for Reconsideration on the grounds of Branch 6 of the Regional Trial Court of Dipolog City decided the case in estoppel, absence of fraud and prescription. The appellate court denied favor of defendants-appellees, it holding that by virtue of the assailed the Motion for Reconsideration in its Resolution[12] dated October 16, document the due execution of which was not contested by plaintiff- 2002 ruling that the grounds relied upon have been addressed in its appellant, the properties were absolutely transferred to defendants- Decision dated April 11, 2002. Anent the ground of prescription, the appellees.[4] 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 A perusal of the deed reveals that it is actually a gratuitous disposition of that actions based on implied or constructive trust prescribe 10 years from property — a donation — although Lauro Sumipat imposed upon the the issuance of a Torrens Title over the property. Since two (2) of the petitioners the condition that he and his wife, Placida, shall be entitled to subject properties were issued Transfer Certificates of Title (TCT) one-half (1/2) of all the fruits or produce of the parcels of land for their Numbered T-40037[14] and T-40038[15] under the petitioners’ names on subsistence and support. The preliminary clauses of the deed read: August 18, 1987, the Complaint for declaration of nullity of titles, partition, recovery of ownership and possession, reconveyance, accounting and That conscious of my advanced age and failing health, I feel that I am not damages, which was filed on March 3, 1993, was filed well within the capable anymore of attending to and maintaining and keeping in prescriptive period. continuous cultivation my above described properties;

The petitioners are now before this Court principally claiming that Placida That my children are all desirous of taking over the task of maintaining my freely consented to the execution of the deed and that they did not commit properties and have demonstrated since childhood the needed industry fraudulent acts in connection with its execution. They also reiterate their and hard work as they have in fact established possession over my real argument that the Court of Appeals should have dismissed the case on the properties and introduced more improvements over my lands, the fruit of ground of prescription. It is their contention that the present action being which through their concerted efforts and labors, I myself and my family one to annul a contract on the ground of fraud, it should have been filed have enjoyed; within four (4) years from the discovery of fraud or registration of the instrument with the Registry of Deeds. 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 The respondents filed their Comment[16] dated February 7, 2003, names, thereby encouraging them more in developing the lands to its essentially echoing the findings of the Court of Appeals on the matter of fullest productivity.[18] Placida’s consent. According to them, Placida was deceived and misled into affixing her signature on the deed. They further claim that Placida did not The deed covers three (3) parcels of land.[19] Being a donation of actually appear before the notary public to acknowledge the instrument. immovable property, the requirements for validity set forth in Article 749 of the Civil Code should have been followed, viz: In their Reply[17] dated April 29, 2003, the petitioners insist that Placida was not illiterate and that Lauro Sumipat validly transferred the titles over Art. 749. In order that the donation of the immovable may be valid, it must the properties in question to them. They also argue that if Placida did not be made in a public document, specifying therein the property donated understand the import of the deed, she could have questioned Lauro and the value of the charges which the donee must satisfy. Sumipat about it since the deed was executed a year before the latter died. 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 The trial court and the Court of Appeals are in agreement that the subject during the lifetime of the donor. 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 If the acceptance is made in a separate instrument, the donor shall be instrument of transfer of all the litigated parcels of land in their entirety on notified thereof in an authentic form, and this step shall be noted in both the ground that Placida failed to question its authenticity and due instruments. 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 Title to immovable property does not pass from the donor to the donee by vitiated by mistake. 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 At bottom, the crux of the controversy is whether the questioned deed by be made in the very same instrument of donation. If the acceptance does its terms or under the surrounding circumstances has validly transferred not appear in the same document, it must be made in another. Where the title to the disputed properties to the petitioners. 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 Q- How old was she? the donor or else not noted in the deed of donation and in the separate acceptance, the donation is null and void.[20] A- I did not know if she was already 30 years old at that time because he was born in 1950. 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 Atty. Legorio:-(To the witness) instrument of donation is patently void. Q- When you said Lydia Sumipat, you are referring to one of the We also note the absence of any proof of filing of the necessary return, defendants in this case? payment of donor’s taxes on the transfer, or exemption from payment thereof. Under the National Internal Revenue Code of 1977, the tax code A- Yes, sir. She is the one. 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 Q- This Lydia Sumipat you are referring to as one of the principal Agent or duly authorized Treasurer of the municipality in which the donor defendant and daughter of your husband with his paramour, in January, was domiciled at the time of the transfer.[21] The filing of the return and 1983 what was her educational attainment, if you know? payment of donor’s taxes are mandatory. In fact, the registrar of deeds is mandated not to register in the registry of property any document A- She has already finished schooling. 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 Q- Do you know what she obtained? the transaction is tax exempt from the Commissioner of Internal Revenue, in either case, is presented.[22] A- Teacher.

Neither can we give effect to the deed as a sale, barter or any other Q- You said she arrived in the afternoon of January 5, 1983 in your house onerous conveyance, in the absence of valid cause or consideration and while you were boiling water. What did she do when she arrived there? consent competently and validly given.[23] While it is true that the appellate court found Placida’s consent to have been vitiated by mistake, A- She brought with her a paper. her testimony on the matter actually makes out a case of total absence of consent, not merely vitiation thereof. She testified in this regard, thus: Q- What did she say to you? Q- What have you been doing on that day on January 5, 1983? 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 A- I was at home boiling water. sign. I asked her because I am unlettered but she said never mind just sign this immediately. Q- While you were boiling water in the house, at that time who arrived, if there was any? Q- By the way, what is your highest educational attainment?

A- Lydia Sumipat arrived. A- I have never gone to school.

Court:-(To the witness) Q- Do you know how to read or to write?

Q- Who is this Lydia Sumipat? A- I know how to write only my name.

A- The daughter of my husband with his paramour. Q- You know how to write your name only? q And your husband also signed that paper?

A- Yes, sir. 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- 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? 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 A- She was in a hurry to let me sign that document so I signed it without document? knowing what was that. a I have not gone to the Municipal building of Manukan and I do not Q- Did she tell you that piece of paper was a document wherein the land know Judge Garcia. including your land in Siayan were to be given to them? q But what you know now that the titles are transferred in the name of A- I did not give my land.[24] the defendants?

During cross-examination, Placida again denied any knowledge of the a It was Lydia who caused the transfer of the titles in their names. nature of the deed: q And you know that fact when you signed that paper? q You are aware that the titles over these lots had already been transferred in the name of the defendants? 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 a They surreptitiously transferred the title in their names, I do not know up because according to them I am no longer entitled to the land.[25] about it. In Baranda v. Baranda,[26] this Court declared that the deeds of sale q You mean to say you signed a document transferring them in their questioned therein are not merely voidable (as intimated by the plaintiffs names? themselves in their complaint for annulment of the deeds and reconveyance of the lots) but null and void ab initio as the supposed seller a There was a piece of paper brought to me to be signed by Lydia; I declared under oath that she signed the deeds without knowing what they asked what’s all about but she did not tell me; I was forced to sign were. The significant circumstance meant, the Court added, that her considering that according to her somebody was waiting for it. 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. q What do you mean that you are force to sign? Parenthetically, as Placida’s Complaint is entitled Declaration of Nullity of Titles; Contracts; Partition, Recovery of Ownership and Possession; a She told me to sign that paper immediately because there is a witness Reconveyance; Accounting and Damages with Prayer for Preliminary waiting that paper but she was alone when she came to me. Injunction and Receivership, the validity of the deed was directly assailed, but its absolute nullity was not specifically raised as an issue. q So you signed that paper? Nevertheless, both the RTC and the appellate court took the cue from Placida’s theory that the deed is merely voidable as regards her conjugal a I signed it because she was in a hurry. share of the properties. However, since the real issue is whether the questioned deed has validly transferred ownership of the litigated q That was done during the lifetime of your husband? 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 a Yes, sir. nullity of the deed. From the substantive and procedural standpoints, the objectives to write imprescriptible. As long as the land wrongfully registered under the finis to a protracted litigation and avoid multiplicity of suits are worth Torrens system is still in the name of the person who caused such pursuing at all times. Conformably, we have ruled in a number of cases registration, an action in personam will lie to compel him to reconvey the that an appellate court is accorded broad discretionary power to consider property to the real owner.[30] 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 One final note. After this Decision shall have become final and executory, but affecting jurisdiction over the subject matter; (2) matters not assigned the parties may either extrajudicially divide the estates of Lauro Sumipat as errors on appeal but are evidently plain or clerical errors within and Placida Tabotabo pursuant to Rule 74 of the Rules of Court or judicially contemplation of law; (3) matters not assigned as errors on appeal but settle the estates pursuant to Rules 78, et seq., in accordance with this consideration of which is necessary in arriving at a just decision and Decision and the law. complete resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice; (4) matters not specifically assigned as WHEREFORE, the instant Petition for Review on Certiorari is DENIED. The errors on appeal but raised in the trial court and are matters of record Decision of the Regional Trial Court dated September 29, 1997 and the having some bearing on the issue submitted which the parties failed to Decision of the Court of Appeals dated April 11, 2002, as well as its raise or which the lower court ignored; (5) matters not assigned as errors Resolution dated October 16, 2002, are VACATED. In lieu thereof, on appeal but closely related to an error assigned; and (6) matters not judgment is hereby rendered in favor of the respondents, to wit: (i) assigned as errors on appeal but upon which the determination of a DECLARING the Deed of Absolute Transfer and/or Quitclaim dated January question properly assigned is dependent.[27] 5, 1983 NULL AND VOID; and (ii) ORDERING the CANCELLATION of Transfer Certificates of Title Numbered T-40037 and T-40038 (Zamboanga del In the instant case, the validity of the deed was directly assailed although Norte) and the tax declaration covering the unregistered parcel of land, all both parties are of the view that it is not an absolute nullity. The correct issued in the names of the petitioners Lydia, Laurito, Alicia, Alejandro and characterization of the deed is, therefore, determinative of the present Lirafe, all surnamed Sumipat, and the REINSTATEMENT of Original controversy. Elsewise framed, the issue of validity or nullity is interwoven Certificate of Title No. P-17842 (Zamboanga del Norte) Transfer Certificate with the positions adopted by the parties and the rulings made by the Title No. T-15826 (Zamboanga del Norte) and the tax declaration covering courts below. Hence, we shall be resolute in striking down the deed the unregistered parcel of land, all in the name of “Lauro Sumipat . . . especially as it appears on its face to be a patent nullity. married to Placida Tabotabo.”

Having said this, we shall now proceed to the issue of prescription. Being Costs against the petitioners. 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 SO ORDERED. Code that an action to declare the inexistence of a void contract does not prescribe. Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur. We are thus unimpressed by the petitioners’ contention that the appellate court should have dismissed Placida’s appeal on the ground of prescription. Passage of time cannot cure the fatal flaw in an inexistent Republic of the Philippines and void contract.[28] The defect of inexistence of a contract is permanent SUPREME COURT and incurable; hence, it cannot be cured either by ratification or by Manila prescription. [29] EN BANC 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 G.R. No. 22173 September 25, 1924 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 JULIANA ABRAGAN, ET AL., plaintiff-appellants, recites that her deceased father had in life made two donations in favor of vs. his daughter, Julieta G. Abragan, and Juliana Abragan, vesting the nude RITA G. DE CENTENERA, ET AL., defendants-appellants. ownership in Julieta and the usufruct in Juliana. The declarant then proceeds to give a description of the two properties described in the deed M. L. de la Rosa for appellants. of gift Exhibit A, but making no mention of the hemp land described in the Pablo C. Sibulo for appellees. document Exhibit B; and she declares that, being the universal heir of all the property left by her deceased father, she recognizes said donations as STREET, J.: his last expressed will, "in order that they may have full legal effect in the premises" ( para que tengan sus efectos, cuantos en derecho lugar haya). By the amended complaint filed in this cause in the Court of First Instance of the Province of Camarines Sur on January 18, 1923, the plaintiffs, Juliana After this document had been executed and delivered, Rita G. de Abragan and her daughter, Jose N. Garchitorena, administrator of the Centenera ceased to be special administratrix of the estate of her father estate of Andres Garchitorena, deceased, three parcels of real property and one Jose N. Garchitorena was appointed as administrator in her stead. described in paragraph I of the complaint; to obtain a judicial declaration The properties mentioned in the deeds of gift appear to have come into the that said property belongs in usufruct to the plaintiff, Juliana Abragan, with possession of the said administrator of Andres Garchitorena, who now the nude ownership in her daughter, Julieta; and further to recover a sum refuses to recognize the validity of the donations. The present action was of money as alleged damages for detention of the said properties. Upon therefore instituted by the Abragans, mother and daughter, to test their hearing the cause the trial court absolved the defendants from the rights upon the facts above recited. complaint and the plaintiffs appealed. It is quite evident, as declared by the trial judge, that these deeds of gift, It appears that Julieta G. Abragan is the natural daughter of Don Andres Exhibits A and B, had no effect whatever per se, for the reason that the Garchitorena, deceased, formerly a resident of the municipality of Tigaon, instruments referred to never took the form of a public document and were in the Province of Camarines Sur. Not long before his death in the year not accepted by the donees in any public document in the life of the donor. 1921 the said Andres Garchitorena executed two deeds of gift, Exhibits A, (Velasquez vs. Biala, 18 Phil., 231; Abellara vs. Balanag, 37 Phil., 865.) Nor and B, bearing the date of February 10, 1920, though the correct date was can it be said that the donations are onerous and subject to the rules evidently 1921. The first of these documents conveys by way of gift to governing contracts (art. 622, Civ. Code), although said donations are Julieta G. Abragan and her mother Juliana Abragan, two parcels of declared by the donor to rest in part upon consideration of the past property, named, first, a piece of land planted with fruit-bearing coconut services rendered to him by Juliana Abragan. A gift in compensation for trees and having an idea of nine hectares, located in the barrio of Matacla, services is considered to have been made upon an onerous consideration in the municipality of Goa, Camarines Sur, valued at P2,000; and, secondly, (causa onerosa) only when the services which constitute the determining a building lot in the pueblo of Tigaon, of an area of 446 square meters, cause have not yet been rendered. (Carlos vs. Ramil, 20 Phil., 183.) containing a warehouse (camarin) for commercial use, and having a value of P1,900. The instrument gives to the mother, Juliana, the usufruct in It appears that the deed of conveyance of the hemp land, Exhibit B, these properties and to the daughter, Julieta, the nude ownership. By the imposes on the donee the duty to pay off a mortgage or P5,000 in favor of second instrument (Exhibit B) the same donor gives to the same donees the Philippine National Bank; and it is suggested that this gift should be and in the same manner a piece of hemp land having an area of twenty considered as having been made upon an onerous consideration from the hectares, and located in the barrio of Tinawagan, municipality of Tigaon, existence of this obligation, but it is clear that it cannot be so considered. Camarines Sur. Both of these instruments contain an acceptance of the As was said by Chief Justice Arellano in Castillo vs. Castillo and Quizon (23 gifts on the part of Julieta G. Abragan, aided by her mother Juliana; but Phil., 364, 367), "A gift of this kind is not in fact a gift for a valuable owing to circumstances not necessary to be here set out, neither consideration, but is remuneratory or compensatory, made for the purpose document was at any time acknowledged before a notary public. of remunerating or compensating a charge, burden or condition imposed upon the donee, inferior to the value of the gift, . . ." and under article 622 After the death of the donor, Rita G. de Centenera, who is the sole heir of of the Civil Code such a gift is governed by the provisions relating to gifts Andres Garchitorena, qualified as special administratrix of his estate; and and not contracts. on April 1, 1921, she executed a public document (Exhibit D) in which she It remains to consider what effect, if any, can be attributed to the deed Once again, the Court is faced with the perennial conflict of property executed by Rita G. de Centenera after her father's death, in which she, in claims between two sets of heirs, a conflict ironically made grievous by the her own right and as sole heir of her father, recognized the validity of the fact that the decedent in this case had resorted to great lengths to allocate gifts contained in Exhibit A (not Exhibit B). Upon this point it is at once which properties should go to which set of heirs. obvious that this act cannot be considered as having retroactively perfected the gifts attempted to be made in the Exhibit A. But we are of This is a Rule 45 petition assailing the Decision[1] dated 30 September the opinion that this document should operate, with respect to the lands 1999 of the Court of Appeals which reversed the Decision[2] dated 7 May mentioned therein, as a quitclaim on the part of Rita G. de Centenera, and 1993 of the Regional Trial Court (RTC), Branch 45, of Bais City, Negros she is estopped from asserting any right to said properties. In this Oriental. connection we note that the commentator Manresa cites a decision of the supreme court of Spain, from June 12, 1896, in which a ratification by the The factual antecedents follow. heirs of a deceased donor was given effect although the deed of gift had never been accepted in the form required by law. (5 Manresa, 2d ed., 115.) The deed of ratification in the case before us was based upon a Don Julian L. Teves (Don Julian) contracted two marriages, first with commendable motive, which was the desire of the declarant to give effect Antonia Baena (Antonia), and after her death, with Milagros Donio Teves to the wishes of her father. This was a good consideration in law and (Milagros Donio). Don Julian had two children with Antonia, namely: Josefa sufficient to give legal effect to the instrument, though not precisely in the Teves Escaño (Josefa) and Emilio Teves (Emilio). He had also four (4) sense expressed. It is needless to say that this document could not be children with Milagros Donio, namely: Maria Evelyn Donio Teves (Maria given effect to the prejudice of creditors of the estate of a deceased Evelyn), Jose Catalino Donio Teves (Jose Catalino), Milagros Reyes Teves person, and while we hold that it is effective for the purpose or raising an (Milagros Reyes) and Pedro Reyes Teves (Pedro).[3] estoppel against the heir, the plaintiffs cannot maintain this action against the administrator of the donor. It will therefore be necessary for them to The present controversy involves a parcel of land covering nine hundred intervene in the proceedings in administration and ask that their rights to and fifty-four (954) square meters, known as Lot No. 63 of the Bais the properties covered by Exhibit A be there recognized. Cadastre, which was originally registered in the name of the conjugal partnership of Don Julian and Antonia under Original Certificate of Title A judgment of affirmance pro forma must therefore be entered, without (OCT) No. 5203 of the Registry of Deeds of Bais City. When Antonia died, prejudice to the right of the plaintiffs to assert their rights by a proper the land was among the properties involved in an action for partition and proceeding in the administration of the estate. The judgment will be damages docketed as Civil Case No. 3443 entitled “Josefa Teves Escaño v. affirmed, without express pronouncement as to costs. So ordered. Julian Teves, Emilio B. Teves, et al.”[4] Milagros Donio, the second wife of Don Julian, participated as an intervenor. Thereafter, the parties to the case entered into a Compromise Agreement[5] which embodied the Johnson, Malcolm, Avanceña, Villamor, Ostrand and Romualdez, JJ., concur. partition of all the properties of Don Julian.

SECOND DIVISION On the basis of the compromise agreement and approving the same, the Court of First Instance (CFI) of Negros Oriental, 12th Judicial District, [G.R. No. 141882. March 11, 2005] rendered a Decision[6] dated 31 January 1964. The CFI decision declared a tract of land known as Hacienda Medalla Milagrosa as property owned in J.L.T. AGRO, INC., represented by its Manager, JULIAN L. TEVES, petitioner, common by Don Julian and his two (2) children of the first marriage. The vs. ANTONIO BALANSAG and HILARIA CADAYDAY, respondents. property was to remain undivided during the lifetime of Don Julian.[7] Josefa and Emilio likewise were given other properties at Bais, including D E C I S I O N the electric plant, the “movie property,” the commercial areas, and the house where Don Julian was living. The remainder of the properties was TINGA, J.: retained by Don Julian, including Lot No. 63. Paragraph 13 of the Compromise Agreement, at the heart of the present that the subject lot was already registered in the name of petitioner in dispute, lays down the effect of the eventual death of Don Julian vis-à-vis 1979, respondents bought Lot No. 63 from Milagros Donio as evidenced by his heirs: the Deed of Absolute Sale of Real Estate[16] dated 9 November 1983.

13. That in the event of death of Julian L. Teves, the properties hereinafter At the Register of Deeds while trying to register the deed of absolute sale, adjudicated to Josefa Teves Escaňo and Emilio B. Teves, (excluding the respondents discovered that the lot was already titled in the name of properties comprised as Hacienda Medalla Milagrosa together with all its petitioner. Thus, they failed to register the deed.[17] accessories and accessions) shall be understood as including not only their one-half share which they inherited from their mother but also the Respondents, as vendees of Lot No. 63, filed a complaint before the RTC legitimes and other successional rights which would correspond to them of Branch 45 of Bais City, seeking the declaration of nullity and cancellation the other half belonging to their father, Julian L. Teves. In other words, the of TCT No. T-375 in the name of petitioner and the transfer of the title to properties now selected and adjudicated to Julian L. Teves (not Lot No. 63 in their names, plus damages.[18] including his share in the Hacienda Medalla Milagrosa) shall exclusively be adjudicated to the wife in second marriage of Julian L. After hearing, the trial court dismissed the complaint filed by respondents. Teves and his four minor children, namely, Milagros Donio Teves, his two The dispositive portion of the decision reads: acknowledged natural children Milagros Reyes Teves and Pedro Reyes Teves and his two legitimated children Maria Evelyn Donio Teves and Jose Catalino Donio Teves. (Emphasis supplied) WHEREFORE, premises considered, by preponderance of evidence, this Court finds judgment in favor of the defendant and against the plaintiff, and thus hereby orders: On 16 November 1972, Don Julian, Emilio and Josefa executed a Deed of Assignment of Assets with Assumption of Liabilities[8] in favor of J.L.T. Agro, Inc. (petitioner). Less than a year later, Don Julian, Josefa and Emilio (1) That complaint be dismissed; also executed an instrument entitled Supplemental to the Deed of Assignment of Assets with the Assumption of Liabilities (Supplemental (2) That plaintiffs vacate the subject land, particularly Deed)[9] dated 31 July 1973. This instrument which constitutes a identified as Lot No. 63 registered under Transfer supplement to the earlier deed of assignment transferred ownership over Certificate of Title No. T-375; Lot No. 63, among other properties, in favor of petitioner.[10] On 14 April 1974, Don Julian died intestate. (3) That plaintiffs pay costs.

On the strength of the Supplemental Deed in its favor, petitioner sought Finding no basis on the counterclaim by defendant, the same is hereby the registration of the subject lot in its name. A court, so it appeared, ordered dismissed.[19] issued an order[11] cancelling OCT No. 5203 in the name of spouses Don Julian and Antonia on 12 November 1979, and on the same date TCT No. T- The trial court ruled that the resolution of the case specifically hinged on 375 was issued in the name of petitioner.[12] Since then, petitioner has the interpretation of paragraph 13 of the Compromise Agreement.[20] It been paying taxes assessed on the subject lot.[13] added that the direct adjudication of the properties listed in the Compromise Agreement was only in favor of Don Julian and his two Meanwhile, Milagros Donio and her children had immediately taken children by the first marriage, Josefa and Emilio.[21] Paragraph 13 served possession over the subject lot after the execution of the Compromise only as an amplification of the terms of the adjudication in favor of Don Agreement. In 1974, they entered into a yearly lease agreement with Julian and his two children by the first marriage. spouses Antonio Balansag and Hilaria Cadayday, respondents herein.[14] On Lot No. 63, respondents temporarily established their home and According to the trial court, the properties adjudicated in favor of Josefa constructed a lumber yard. Subsequently, Milagros Donio and her children and Emilio comprised their shares in the estate of their deceased mother executed a Deed of Extrajudicial Partition of Real Estate[15] dated 18 Antonia, as well as their potential share in the estate of Don Julian upon the March 1980. In the deed of partition, Lot No. 63 was allotted to Milagros latter’s death. Thus, upon Don Julian’s death, Josefa and Emilio could not Donio and her two (2) children, Maria Evelyn and Jose Catalino. Unaware claim any share in his estate, except their proper share in the Hacienda Medalla Milagrosa which was adjudicated in favor of Don Julian in the future legitimes in his estate except as regards his (Don Julian’s) share in Compromise Agreement. As such, the properties adjudicated in favor of Hacienda Medalla Milagrosa.[29] The two sets of heirs acquired full Don Julian, except Hacienda Medalla Milagrosa, were free from the forced ownership and possession of the properties respectively adjudicated to legitimary rights of Josefa and Emilio, and Don Julian was under no them in the CFI decision and Don Julian himself could no longer dispose of impediment to allocate the subject lot, among his other properties, to the same, including Lot No. 63. The disposition in the CFI decision Milagros Donio and her four (4) children.[22] constitutes res judicata.[30] Don Julian could have disposed of only his conjugal share in the Hacienda Medalla Milagrosa.[31] The trial court further stressed that with the use of the words “shall be,” the adjudication in favor of Milagros Donio and her four (4) children was The appellate court likewise emphasized that nobody in his right judgment not final and operative, as the lot was still subject to future disposition by would preterit his legal heirs by simply executing a document like the Don Julian during his lifetime.[23] It cited paragraph 14[24] of the Supplemental Deed which practically covers all properties which Don Julian Compromise Agreement in support of his conclusion.[25] With Lot No. 63 had reserved in favor of his heirs from the second marriage. It also found being the conjugal property of Don Julian and Antonia, the trial court also out that the blanks reserved for the Book No. and Page No. at the upper declared that Milagros Donio and her children had no hereditary rights right corner of TCT No. T-375, “to identify the exact location where the said thereto except as to the conjugal share of Don Julian, which they could title was registered or transferred,” were not filled up, thereby indicating claim only upon the death of the latter.[26] that the TCT is “spurious and of dubious origin.”[32]

The trial court ruled that at the time of Don Julian’s death on 14 April 1974, Aggrieved by the appellate court’s decision, petitioner elevated it to this Lot No. 63 was no longer a part of his estate since he had earlier assigned Court via a petition for review on certiorari, raising pure questions of law. it to petitioner on 31 July 1973. Consequently, the lot could not be a proper subject of extrajudicial partition by Milagros Donio and her children, Before this Court, petitioner assigns as errors the following rulings of the and not being the owners they could not have sold it. Had respondents appellate court, to wit: (a) that future legitime can be determined, exercised prudence before buying the subject lot by investigating the adjudicated and reserved prior to the death of Don Julian; (b) that Don registration of the same with the Registry of Deeds, they would have Julian had no right to dispose of or assign Lot No. 63 to petitioner because discovered that five (5) years earlier, OCT No. 5203 had already been he reserved the same for his heirs from the second marriage pursuant to cancelled and replaced by TCT No. T-375 in the name of petitioner, the trial the Compromise Agreement; (c) that the Supplemental Deed was court added.[27] tantamount to a preterition of his heirs from the second marriage; and (d) that TCT No. T-375 in the name of petitioner is spurious for not containing The Court of Appeals, however, reversed the trial court’s decision. The entries on the Book No. and Page No.[33] decretal part of the appellate decision reads: While most of petitioner’s legal arguments have merit, the application of WHEREFORE, premises considered, the decision appealed from is hereby the appropriate provisions of law to the facts borne out by the evidence on REVERSED and SET ASIDE and a new one is entered declaring the Transfer record nonetheless warrants the affirmance of the result reached by the Certificate of Title No. T-375 registered in the name of J.L.T. Agro, Inc. as Court of Appeals in favor of respondents. null and void. Being the key adjudicative provision, paragraph 13 of the Compromise With costs against defendant J.L.T. Agro, Inc. represented by its Manager, Agreement has to be quoted again: Julian L. Teves. 13. That in the event of death of Julian L. Teves, the properties herein SO ORDERED.[28] adjudicated to Josefa Teves Escaño and Emilio B. Teves, (excluding the properties comprised as Hacienda Medalla Milagrosa together with all its Per the appellate court, the Compromise Agreement incorporated in CFI accessories and accessions) shall be understood as including not only their decision dated 31 January 1964, particularly paragraph 13 thereof, one-half share which they inherited from their mother but also the determined, adjudicated and reserved to Don Julian’s two sets of heirs their legitimes and other successional rights which would correspond to them of the other half belonging to their father, Julian L.Teves. In other words, the properties now selected and adjudicated to Julian L. Teves (1) That the succession has not yet been opened; (not including his share in the Hacienda Medalla Milagrosa) shall (2) That the object of the contract forms part of the exclusively be adjudicated to the wife in second marriage of Julian inheritance; and L. Teves and his four minor children, namely, Milagros Donio (3) That the promissor has, with respect to the object, an Teves, his two acknowledged natural children Milagros Reyes expectancy of a right which is purely hereditary in nature.[37] Teves and Pedro Reyes Teves and his two legitimated children Maria Evelyn Donio Teves and Jose Catalino Donio Teves.” The first paragraph of Article 1080, which provides the exception to the (Emphasis supplied) exception and therefore aligns with the general rule on future things, reads: With the quoted paragraph as basis, the Court of Appeals ruled that the adjudication in favor of the heirs of Don Julian from the second marriage ART. 1080. Should a person make a partition of his estate by an act inter became automatically operative upon the approval of the Compromise vivos, or by will, such partition shall be respected, insofar as it does not Agreement, thereby vesting on them the right to validly dispose of Lot No. prejudice the legitime of the compulsory heirs. 63 in favor of respondents. . . . . Petitioner argues that the appellate court erred in holding that future legitime can be determined, adjudicated and reserved prior to the death of In interpreting this provision, Justice Edgardo Paras advanced the opinion Don Julian. The Court agrees. Our declaration in Blas v. Santos[34] is that if the partition is made by an act inter vivos, no formalities are relevant, where we defined future inheritance as any property or right not prescribed by the Article.[38] The partition will of course be effective in existence or capable of determination at the time of the only after death. It does not necessarily require the formalities of a will contract, that a person may in the future acquire by succession. Article for after all it is not the partition that is the mode of acquiring ownership. 1347 of the New Civil Code explicitly provides: Neither will the formalities of a donation be required since donation will not be the mode of acquiring the ownership here after death; since no will has ART. 1347. All things which are not outside the commerce of men, been made it follows that the mode will be succession (intestate including future things, may be the object of a contract. All rights which are succession). Besides, the partition here is merely the physical not intransmissible may also be the object of contracts. determination of the part to be given to each heir.[39]

No contract may be entered into upon future inheritance except in The historical antecedent of Article 1080 of the New Civil Code is Article cases expressly authorized by law. 1056[40] of the old Civil Code. The only change in the provision is that Article 1080 now permits any person (not a testator, as under the old law) All services which are not contrary to law, morals, good customs, public to partition his estate by act inter vivos. This was intended to abrogate the order or public policy may likewise be the object of a contract. then prevailing doctrine that for a testator to partition his estate by an act inter vivos, he must first make a will with all the formalities provided by Well-entrenched is the rule that all things, even future ones, which are not law.[41] outside the commerce of man may be the object of a contract. The exception is that no contract may be entered into with respect to future Article 1056 of the old Civil Code (now Article 1080) authorizes a testator inheritance, and the exception to the exception is the partition inter vivos to partition inter vivos his property, and distribute them among his heirs, referred to in Article 1080.[35] and this partition is neither a donation nor a testament, but an instrument of a special character, sui generis, which is revocable at For the inheritance to be considered “future,” the succession must not any time by the causante during his lifetime, and does not operate have been opened at the time of the contract.[36] A contract may be as a conveyance of title until his death. It derives its binding force on classified as a contract upon future inheritance, prohibited under the the heirs from the respect due to the will of the owner of the property, second paragraph of Article 1347, where the following requisites concur: limited only by his creditors and the intangibility of the legitime of the forced heirs.[42] The partition inter vivos of the properties of Don Julian is undoubtedly valid In the case at bar, Don Julian did not execute a will since what he resorted pursuant to Article 1347. However, considering that it would become to was a partition inter vivos of his properties, as evidenced by the court legally operative only upon the death of Don Julian, the right of his heirs approved Compromise Agreement. Thus, it is premature if not irrelevant to from the second marriage to the properties adjudicated to him under the speak of preterition prior to the death of Don Julian in the absence of a will compromise agreement was but a mere expectancy. It was a bare hope of depriving a legal heir of his legitime. Besides, there are other properties succession to the property of their father. Being the prospect of a future which the heirs from the second marriage could inherit from Don Julian acquisition, the interest by its nature was inchoate. It had no attribute of upon his death. A couple of provisions in the Compromise Agreement are property, and the interest to which it related was at the time nonexistent indicative of Don Julian’s desire along this line.[48] Hence, the total and might never exist.[43] omission from inheritance of Don Julian’s heirs from the second marriage, a requirement for preterition to exist, is hardly imaginable as it is unfounded. Evidently, at the time of the execution of the deed of assignment covering Lot No. 63 in favor of petitioner, Don Julian remained the owner of the Despite the debunking of respondents’ argument on preterition, still the property since ownership over the subject lot would only pass to his heirs petition would ultimately rise or fall on whether there was a valid transfer from the second marriage at the time of his death. Thus, as the owner of effected by Don Julian to petitioner. Notably, Don Julian was also the the subject lot, Don Julian retained the absolute right to dispose of it during president and director of petitioner, and his daughter from the first his lifetime. His right cannot be challenged by Milagros Donio and her marriage, Josefa, was the treasurer thereof. There is of course no legal children on the ground that it had already been adjudicated to them by prohibition against such a transfer to a family corporation. Yet close virtue of the compromise agreement. scrutiny is in order, especially considering that such transfer would remove Lot No. 63 from the estate from which Milagros and her children could Emerging as the crucial question in this case is whether Don Julian had inherit. Both the alleged transfer deed and the title which necessarily must validly transferred ownership of the subject lot during his lifetime. The have emanated from it have to be subjected to incisive and detailed lower court ruled that he had done so through the Supplemental Deed. examination. The appellate court disagreed, holding that the Supplemental Deed is not valid, containing as it does a prohibited preterition of Don Julian’s heirs Well-settled, of course, is the rule that a certificate of title serves as from the second marriage. Petitioner contends that the ruling of the Court evidence of an indefeasible title to the property in favor of the person of Appeals is erroneous. The contention is well-founded. whose name appears therein.[49] A certificate of title accumulates in one document a precise and correct statement of the exact status of the fee Article 854 provides that the preterition or omission of one, some, or all of held by its owner. The certificate, in the absence of fraud, is the evidence the compulsory heirs in the direct line, whether living at the time of the of title and shows exactly the real interest of its owner.[50] execution of the will or born after the death of the testator, shall annul the institution of heir; but the devises and legacies shall be valid insofar as To successfully assail the juristic value of what a Torrens title establishes, a they are not inofficious. Manresa defines preterition as the omission of the sufficient and convincing quantum of evidence on the defect of the title heir in the will, either by not naming him at all or, while mentioning him as must be adduced to overcome the predisposition in law in favor of a holder father, son, etc., by not instituting him as heir without disinheriting him of a Torrens title. Thus, contrary to the appellate court’s ruling, the expressly, nor assigning to him some part of the properties.[44] It is the appearance of a mere thumbmark of Don Julian instead of his signature in total omission of a compulsory heir in the direct line from inheritance.[45] the Supplemental Deed would not affect the validity of petitioner’s title for It consists in the silence of the testator with regard to a compulsory heir, this Court has ruled that a thumbmark is a recognized mode of signature. omitting him in the testament, either by not mentioning him at all, or by [51] not giving him anything in the hereditary property but without expressly disinheriting him, even if he is mentioned in the will in the latter case.[46] The truth, however, is that the replacement of OCT No. 5203 in the name But there is no preterition where the testator allotted to a descendant a of Julian by T.C.T. No. T-375 is marred by a grave irregularity which is also share less than the legitime, since there was no total omission of a forced an illegality, as it contravenes the orthodox, conventional and normal heir.[47] process established by law. And, worse still, the illegality is reflected on the face of both titles. Where, as in this case, the transferee relies on a voluntary instrument to secure the issuance of a new title in his name such instrument has to be presented to the Registry of Deeds. This is evident CONDITIONS: Lost owner’s duplicate is hereby cancelled, and null from Sections 53 and 57 of Presidential Decree (P.D.) No. 1529 or the and void and a new Certificate of Title No. 375 is issued per Order Property Registration Decree. The sections read, thus: of the Court of First Instance on file in this office.

SEC. 53. Presentation of owner’s duplicate upon entry of new certificate. – Date of Instrument: November 12, 1979 No voluntary instrument shall be registered by the Register of Deeds Date of Inscription: Nov. 12, 1979 4:00 P.M. unless the owner’s duplicate certificate is presented with such (SGD) MANUEL C. MONTESA instrument, except in cases expressly provided for in this Decree or upon Acting Deputy Register of Deeds II order of the court, for cause shown. (Emphasis supplied) (Emphasis supplied)[52] . . . . What the entry indicates is that the owner’s duplicate of OCT No. 5203 was lost, a petition for the reconstitution of the said owner’s duplicate was SEC. 57. Procedure in registration of conveyances. – An owner desiring to filed in court, and the court issued an order for the reconstitution of the convey his registered land in fee simple shall execute and register a deed owner’s duplicate and its replacement with a new one. But if the entry is of conveyance in a form sufficient in law. The Register of Deeds shall to be believed, the court concerned (CFI, according to the entry) issued an thereafter make out in the registration book a new certificate of title to the order for the issuance of a new title which is TCT No. T-375 although the grantee and shall prepare and deliver to him an owner’s duplicate original of OCT No. 5203 on file with the Registry of Deeds had not been certificate. The Register of Deeds shall note upon the original and duplicate lost. certificate the date of transfer, the volume and page of the registration book in which the new certificate is registered and a reference by number Going by the legal, accepted and normal process, the reconstitution court to the last preceding certificate. The original and the owner’s duplicate of may order the reconstitution and replacement of the lost title only, nothing the grantor’s certificate shall be stamped “cancelled.” The deed of else. Since what was lost is the owner’s copy of OCT No. 5203, only that conveyance shall be filed and endorsed with the number and the owner’s copy could be ordered replaced. Thus, the Register of Deeds place of registration of the certificate of title of the land conveyed. exceeded his authority in issuing not just a reconstituted owner’s copy of (Emphasis supplied) the original certificate of title but a new transfer certificate of title in place of the original certificate of title. But if the court order, as the entry As petitioner bases its right to the subject lot on the Supplemental Deed, it intimates, directed the issuance of a new transfer certificate of title—even should have presented it to the Register of Deeds to secure the transfer of designating the very number of the new transfer certificate of title itself— the title in its name. Apparently, it had not done so. There is nothing on the order would be patently unlawful. A court cannot legally order the OCT No. 5203 or on the succeeding TCT No. T-375 either which shows that cancellation and replacement of the original of the O.C.T. which has not it had presented the Supplemental Deed. In fact, there is absolutely no been lost,[53] as the petition for reconstitution is premised on the loss mention of a reference to said document in the original and transfer merely of the owner’s duplicate of the OCT certificates of title. It is in this regard that the finding of the Court of Appeals concerning the absence of entries on the blanks intended for the Apparently, petitioner had resorted to the court order as a convenient Book No. and Page No. gains significant relevance. Indeed, this aspect contrivance to effect the transfer of title to the subject lot in its name, fortifies the conclusion that the cancellation of OCT No. 5203 and the instead of the Supplemental Deed which should be its proper course of consequent issuance of TCT No. T-375 in its place are not predicated on a action. It was so constrained to do because the Supplemental Deed does valid transaction. not constitute a deed of conveyance of the “registered land in fee simple” “in a form sufficient in law,” as required by Section 57 of P.D. No. 1529. What appears instead on OCT No. 5203 is the following pertinent entry: A plain reading of the pertinent provisions of the Supplemental Deed Entry No. 1374: Kind: Order: Executed in favor of J.L.T. AGRO, INC. discloses that the assignment is not supported by any consideration. The provision reads: . . . . The Court of Appeals, on the other hand, apparently considered the 1948 mortgage which is annotated on the back of the TCT No. T-375 as the WHEREAS, in the Deed of Assignment of Assets with the Assumption of consideration for the assignment.[56] However, the said annotation[57] Liabilities executed by Julian L. Teves, Emilio B. Teves and Josefa T. Escaño shows that the mortgage was actually executed in favor of Rehabilitation at Dumaguete City on 16th day of November 1972 and ratified in the City of Finance Corporation, not of petitioner.[58] Clearly, said mortgage, Dumaguete before Notary Public Lenin Victoriano, and entered in the executed as it was in favor of the Rehabilitation Finance Corporation and latter’s notarial register as Doc. No. 367; Page No. 17; Book No. V; series of there being no showing that petitioner itself paid off the mortgate 1972, Julian L. Teves, Emilio B. Teves and Josefa T. Escaño, transferred, obligation, could not have been the consideration for the assignment to conveyed and assigned unto J.L.T. AGRO, INC., all its assets and liabilities petitioner. as reflected in the Balance Sheet of the former as of December 31, 1971. Article 1318 of the New Civil Code enumerates the requisites of a valid WHEREAS, on the compromise agreement, as mentioned in the Decision contract, namely: (1) consent of the contracting parties; (2) object certain made in the Court of First Instance of Negros Oriental, 12th Judicial District which is the subject matter of the contract; and (3) Cause of the obligation Branch II, on Dec. 31, 1964 pertaining to Civil Case No. 3443 the following which is established. properties were adjudicated to Don Julian L. Teves. We quote. Thus, Article 1352 declares that contracts without cause, or with unlawful From the properties at Bais cause produce no effect whatsoever. Those contracts lack an essential Adjudicated to Don Julian L.Teves element and they are not only voidable but void or inexistent pursuant to Article 1409, paragraph (2).[59] The absence of the usual recital of . . . . consideration in a transaction which normally should be supported by a consideration such as the assignment made by Don Julian of all nineteen (19) lots he still had at the time, coupled with the fact that the assignee is Lot No. 63, Tax Dec. No. 33, Certificate of Title No. 5203, together with all a corporation of which Don Julian himself was also the President and improvements. Assessed value - P2,720.00 Director, forecloses the application of the presumption of existence of consideration established by law.[60] . . . . Neither could the Supplemental Deed validly operate as a donation. Article WHEREAS, this Deed of Assignment is executed by the parties herein in 749 of the New Civil Code is clear on the point, thus: order to effect the registration of the transfer of the above corporation. Art. 749. In order that the donation of the immovable may be valid, it must NOW, THEREFORE, for and in consideration of the above premises the be made in a public document, specifying therein the property donated ASSIGNOR hereby transfers, conveys, and assigns unto J.L.T. AGRO, INC., and the value of the charges which the donee must satisfy. the above described parcel of land[s] with a fair market value of EIGHTY-FOUR THOUSAND PESOS (P84,000.00), Philippine Currency, The acceptance may be made in the same deed of donation or in a and which transfer, conveyance and assignment shall become absolute separate public document, but it shall not take effect unless it is done upon signing.[54] (Emphasis supplied) during the lifetime of the donor.

The amount of P84,000.00 adverted to in the dispositive portion of the If the acceptance is made in a separate instrument, the donor shall be instrument does not represent the consideration for the assignment made notified thereof in an authentic form, and this step shall be noted in both by Don Julian. Rather, it is a mere statement of the fair market value of all instruments. the nineteen (19) properties enumerated in the instrument, of which Lot No. 63 is just one, that were transferred by Don Julian in favor of petitioner. Consequently, the testimony[55] of petitioner’s accountant that the In Sumipat, et al v. Banga, et al.,[61] this Court declared that title to assignment is supported by consideration cannot prevail over the clear immovable property does not pass from the donor to the donee by virtue provision to the contrary in the Supplemental Deed. 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 EN BANC 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 G.R. No. L-7307 May 19, 1955 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 PACITA ORTIZ, ET AL., petitioners, the donor or else not noted in the deed of donation and in the separate vs. acceptance, the donation is null and void. THE COURT OF APPEALS and ANDRES BASADA, respondents.

In the case at bar, although the Supplemental Deed appears in a public Marciano Chitongco for petitioners. document,[62] the absence of acceptance by the donee in the same deed Flaviano de Asis for respondents. or even in a separate document is a glaring violation of the requirement. REYES, J.B.L., J.: One final note. From the substantive and procedural standpoints, the cardinal objectives to write finis to a protracted litigation and avoid multiplicity of suits are worth pursuing at all times.[63] Thus, this Court has Pacita Ortiz and Cresencia Ortiz pray for a review of the decision of the ruled that appellate courts have ample authority to rule on specific matters Court of Appeals in its CA-G.R. No. 7691-R, dismissing their complaint not assigned as errors or otherwise not raised in an appeal, if these are against Andres Basada for recovery of a parcel of land in Lapinig, Samar, indispensable or necessary to the just resolution of the pleaded issues.[64] described as follows: Specifically, matters not assigned as errors on appeal but consideration of which are necessary in arriving at a just decision and complete resolution Terreno cocalero ubicado en el municipio de Lapinig, Samar, of the case, or to serve the interest of justice or to avoid dispensing lindante al Norte — Basilio Piangdon, ahora Pedro Mojica; al Este — piecemeal justice.[65] Eugenio Montibon, ahora solar de la escuela; al sur — Colina; y al Oeste — Octavia Anacta, ahora Donata Abique, con un areade In the instant case, the correct characterization of the Supplemental Deed, 3,200 m.c., poco mas o menos a avaluado en P100.00 bajo el Tax i.e., whether it is valid or void, is unmistakably determinative of the No. 4649. (Dec. CA. p. 1). underlying controversy. In other words, the issue of validity or nullity of the instrument which is at the core of the controversy is interwoven with As determined by the Court of Appeals, the parcel of land in question the issues adopted by the parties and the rulings of the trial court and the belonged originally to the spouses Bonifacio Yupo and Vicenta de Guerra. appellate court.[66] Thus, this Court is also resolute in striking down the On April 19, 1940, the owners donated the lot (among others) to their alleged deed in this case, especially as it appears on its face to be a grandchildren, petitioners Ortiz, by public document acknowledged before blatant nullity. Notary Public Liberato Cinco, and couched in the following terms:

WHEREFORE, foregoing premises considered, the Decision dated 30 DEED OF DONATION September 1999 of the Court of Appeals is hereby AFFIRMED. Costs against petitioner J.L.T. Agro, Inc. LET IT BE KNOWN BY ANYBODY WHO MIGHT SEE THIS:

SO ORDERED. That, we, BONIFACIO YUPO AND VICENTA DE GUERRA, Married to each other, both of age, residing at barrio Lapinig, Palapag, Samar, Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., Philippines and CRESENCIA ORTIZ-PINANGAY, ALEJANDRO ORTIZ concur. and PACITA ORTIZ, also of age all of them, the first one residing at the same place and the two others at the barrio of Potong, Republic of the Philippines Palapag, Samar, have agreed on the following: SUPREME COURT Manila THAT BONIFACIO YUPO and VICENTA DE GUERRA, for and in consideration of the liberality and love to their grandchildren, CRESENCIA ORTIZ-PINANGAY, ALEJANDRO ORTIZ and PACITA The donors were duly notified of donee's acceptance. Alejandro Ortiz died ORTIZ, announce to everybody that that at their free will give and without issue in Capas, Tarlac, as a prisoner of war, during the last donate to CRECENCIA ORTIZ-PINANGAY, ALEJANDRO ORTIZ and occupation by the Japanese. PACITA ORTIZ three (3) parcels of land which are as follows: It appears further that on August 14, 1941, the donor spouses executed Tax No. 19738, Awang, Lapinig, Palapag, Samar, bounded in the another notarial deed of donation of the same property, in favor of Andres North — Jacoba Enage; East — Jacoba Enage and Swamp, South — Basada, nephew of the donor Vicenta de Guerra, subject to the condition Awang Stream; and on the West — Fermin Espinisin, Teresa that the donee would serve and take care of the donors until their death. Cesesta and Francisco Donceras. This donation was also duly accepted by the donee in the same instrument (Exh. 1-a). Tax No. 4649, Lapinig, Palapag, Samar; bounded in the North — Basilio Piangdon; on East — Eugenio Montibon; and the South — In 1947, the first donee (Ortiz) filed revindicatory action against the second Colina; and the West — Octavio Anacta. donee (Basada) alleging that in 1946, the latter entered and usurped the land donated to and owned by them, and refused to vacate the same. Tax No. 12144, Potong, Palapag, Samar, bounded on the North — Basada claimed ownership of the land on the ground that the donation in Bo. de Potong; on the East — Playa Mar; South — Juan Sidro; on the favor of the Ortizes had been revoked. The Court of First Instance of Samar West — Juan Sidro. upheld Basada's claim and dismissed the complaint, on the ground that the donees Ortiz had abandoned the donors "to public mercy", with" most base We trust that the donees would divide the lands donated to them ingratitude and highly condemnable heartlessness" by themselves. Upon appeal to the Court of Appeals, the latter correctly held that the That CRESENCIA ORTIZ-PINANGAY, ALEJANDRO ORTIZ and PACITA donation in favor of appellants Ortiz had been duly perfected in accordance ORTIZ, hereby accept this donation intervivos of the with law, and it should "stand until after its revocation should have been abovementioned three (3) parcels of land and that they hereby asked and granted in the proper proceedings," citing our decision in manifest their gratefulness to the sympathy, love and liberality and Ventura vs. Felix, 26 Phil. 500-503. It added that the subsequent donation benevolence of BONIFICIO YUPO and VICENTE DE GUERRA. of the property to Basada " is not, certainly, the way a prior donation should be revoked." In truth hereof, we have placed our names below this 19th day of April, 1940 at Palapag, Samar. Nevertheless, the Court of Appeals upheld the dismissal of the complaint, holding that: (SGD.) CRESENCIA ORTIZ-PINANGAY However, to all appearances, the donors in the instant case had always reserved for themselves the possession and use of the (SGD.) ALEJANDRO ORTIZ (FDO.) BONIFACIO YUPO properties donated. This may be inferred from the fact that the Ortizes were in possession of the land in question from the time it (SGD.) PACITA ORTIZ (FDO.) VICENTA DE GUERRA was donated to them until the donors left their house, and that later, we believe, Basada took possession of it after the donation Signed in the presence of: thereof in his favor was signed and the donors went to live with Signature illegible him. The recovery of possession of the land sought by plaintiff is, Signature illegible therefore, premature because one of the donors in behalf of whom Basada is now in occupancy of the property is still living. At least ACKNOWLEDGMENT BY NOTARY PUBLIC LIBERATO B. CINCO. he should have been included in the case to determine whether he really had parted definitely not only with the ownership but also (Exhibit D-2, trans. of Exh. D) (Dec. CA. pp. 2-3). with the use and possession of the land. Dec. CA. p. 9). G.R. No. L-8327 December 14, 1955

We agree with the petitioners that the conclusion thus drawn is ANTONINA CUEVAS, plaintiff-appellant, unwarranted. From the time the public instrument of donation (Exh. D) was vs. executed and acknowledged by donors and donees in 1940, the latter CRISPULO CUEVAS, defendant-appellee. acquired not only the ownership but also the possession of the donated property, since the execution of a public instrument of the conveyance is Pedro D. Maldia for appellant. one of the recognized ways in which delivery (tradition) of lands may be Teodoro P. Santiago for appellee. made (Civ. Code of 1889, Art. 1463; new Civil Code, Art. 1498), unless from the terms of the deed, the contrary is expressed or inferable. In the present case, the donation (Exh. D) is on its face absolute and unconditional, and nothing in its text authorizes us to conclude that it was limited to the naked ownership of the land donated. Considering that under REYES, J. B. L., J.: the law, a donation of land by Public instrument is required to express the charges that the donee must assume (old Civil Code, Art. 633; new Civil On September 18, 1950, Antonina Cuevas executed a notarized Code, Art. 749), the absence in the deed of any express reservation of conveyance entitled "Donacin Mortis Causa," ceding to her nephew usufruct in favor of the donors in proof that no such reservation was ever Crispulo Cuevas the northern half of a parcel of unregistered land in barrio intended. Sinasajan, municipality of Penaranda, Province of Nueva Ecija (Exhibit A). In the same instrument appears the acceptance of Crispulo Cuevas. The mere fact that the donors remain in the property after donating it is susceptible of varied explanations and does not necessarily imply that "Subsequently, on May 26, 1952, the donor executed another notarial possession or usufruct was excluded from the donation. And the donees instrument entitled "Revocacion de Donacion Mortis Causa" (Exhibit B) Ortiz having been vested with ownership and attendant possession since purporting to set aside the preceding conveyance; and on August 26, 1940, it is clear that the subsequent donation of the property in favor of 1952, she brought action in the Court of First Instance to recover the land respondent Basada confered on the latter no right whatever over the conveyed, on the ground (1) that the donation being mortis causa, it had property as against the former donees. been lawfully revoked by the donor; and (2) even it if were a donation inter vivos, the same was invalidated because (a) it was not properly accepted; Wherefore, and without prejudice to any action of revocation that may (b) because the donor did not reserve sufficient property for her own lawfully apertain to the donors, the decisions of the Court of Appeals and of maintenance, and (c) because the donee was guilty of ingratitute, for the Court of First Instance of Samar dismissing the complaint are hereby having refused to support the donor. reversed, and the respondent Andres Basada is sentenced to restore possession to petitioners Cresencia and Pacita Ortiz. The records of the Issues having been joined, and trial had, the Court of First Instance denied case are ordered remanded to the Court of origin for assessment of the the recovery sought, and Antonina Cuevas thereupon appealed. The Court damages suffered by the petitioners. Cost against respondent Andres of Appeals forwarded the case to this Court because, the case having been Basada. submitted on a stipulation of facts, the appellant raised only questions of law. Pablo, Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador and Concepcion, JJ., concur. The first issue tendered converns the true nature of the deed "Exhibit A"; whether it embodies a donation inter vivos, or a disposition of property Republic of the Philippines mortis causa revocable freely by the transferor at any time before death. 1 SUPREME COURT Manila It has been rules that neither the designation mortis causa, nor the provision that a donation is "to take effect at the death of the donor", is a EN BANC controlling criterion in defining the true nature of donations (Laureta vs. Mata, 44 Phil., 668; Concepcion vs. Concepcion, 91 Phil., 823). Hence, the crux of the controversy revolves around the following provisions of the donee. It is only thus that all the expressions heretofore discussed can be deed of donation: given full effect; and when the donor stated that she would continue to retain the "possession, cultivation, harvesting and all other rights and Dapat maalaman ni Crispulo Cuevas na samantalang ako ay attributes of ownership," she meant only the dominium utile, not the full nabubuhay, and lupa na ipinagkakaloob ko sa kaniya ay ako pa rin ownership. As the Court below correctly observed, the words "rights and and patuloy na mamomosecion, makapagparatrabaho, attributes of ownership" should be construed ejusdem generis with the makikinabang at ang iba pang karapatan sa pagmamayari ay sa preceding rights of "possession, cultivation and harvesting" expressly akin pa rin hanggang hindo ko binabawian ny buhay ng Maykapal enumerated in the deed. Had the donor meant to retain full or absolute at ito naman ay hindi ko nga iya-alis pagkat kung ako ay mamatay ownership she had no need to specify possession, cultivation and na ay inilalaan ko sa kaniya. harvesting, since all these rights are embodied in full or absolute ownership; nor would she then have excluded the right of free disposition There is an apparent conflict in the expression above quoted, in that the from the "rights and attributes of ownership" that she reserved for donor reserves to herself "the right of possession, cultivation, harvesting herself.lawphi1.net and other rights and attributes of ownership while I am not deprived of life by the Almighty"; but right after, the same donor states that she "will not Hence, the Court below rightly concluded that the deed Exhibit A was a takle away" (the property) "because I reserve it for him (the donee) when I valid donation inter vivos, with reservation of beneficial title during the die." lifetime of the donor. We may add that it is highly desirable that all those who are called to prepare or notarize deeds of donation should call the The question to be decided is whetehr the donor intended to part with the attention of the donors to the necessity of clearly specifying whether, title to the property immediately upon the execution of the deed, or only notwithstanding the donation, they wish to retain the right to control and later, when she had died. If the first, the donation is operative inter vivos; if dispose at will of the property before their death, without need of the the second, we would be confronted with a disposition mortis causa, void consent or intervention of the beneficiary, since the express reservation of from the beginning because the formalities of testaments were not such right would be conclusive indication that the liberality is to exist only observed (new Civil Code, Arts. 728 and 828; heirs of Bonsato vs. Court of at the donor's death, and therefore, the formalities of testaments should Appeals, 250 Off. Gaz. (8), p. 3568; Tuason vs. Posadas, 54 Phil., 289; Sent. be observed; while, a converso, the express waiver of the right of free Trib. Sup. of Spain, 8 July 1943). disposition would place the inter vivos character of the donation beyond dispute (Heirs of Bonsato vs. Court of Appeals, 50 Off. Gaz. (8), p. 3568). We agree with the Court below that the decisive proof that the present donation is operative inter vivor lies in the final phrase to the effect that The argument that there was no sufficient acceptance, because the deed the donor will not dispose or take away ("hindi ko nga iya-alis" in the "merely recites that (1) the donee has duly read all the contents of this original) the land "because I am reserving it to him upon my death." By donation; (2) that he 'shall fully respect all its terms'; and (3) that 'for the these words the donor expressly renounced the right to freely dispose of act of benevolence' he is expressing his gratitude" but there is no show of the property in favor of another (a right essential to full ownership) and acceptance (Appellant's brief, p. 7), is without basis. To respect the terms manifested the irrevocability of the conveyance of the naked title to the of the donation, and at the same time express gratitude for the donor's property in favor of the donee. As stated in our decision in Bonsato vs. benevolence, constitutes sufficient acceptance, If the donee did not Court of Appeals, ante, such irrevocability is characteristic of donations accept, what had he to be grateful about? We are no longer under the inter vivos, because it is incompatible with the idea of a disposition post formulary system of the Roman law, when specific expressions had to be mortem. Witness article 828 of the New Civil Code, that provides: used under paid of nullity.

ART. 828. A will may be revoked by the testator at any time before Also unmeritoriious is the contention that the donation is void because the his death. Any waiver or restriction of this right is void. donor failed to reserve enough for ther own support. As we have seen, she expressly reserved to herself all the benefits derivable from the donated property as long as she lived. During that time, she suffered no diminution It is apparent from the entire context of the deed of donation that the of income. If that was not enough to support her, the deficiency was not donor intended that she should retain the entire beneficial ownership dur to the donation. during her lifetime, but that the naked title should irrevocably pass to the Finally, the donee is not rightfully chargeaboe with ingratitude, because it the widow Da. Petrona Reyes, the sum of P94,000 as her part in the "share was expressly stipulated that the donee had a total income of only P30 a of the estate in the shipping business of Ynchausti & Co.," that is, a little month, out of which he had to support himself, his wife and his two over P166,666.66, which was the share in said business of the deceased children. Evidently his means did not allow him to add the donor's support Osorio during his lifetime. The project of partition was approved on May 10, to his own burdens. 1915, with the consent of the heirs, by the Court of First Instance of Cavite, which had cognizance of the testamentary and administration proceedings Wherefore, the decision appealed from is affirmed. No costs in this of the state of the deceased Osorio. instance, appellant having obtained leave to litigate as a pauper. So ordered. On February 28, 1914, the widow of D. Antonio Osorio, Da. Petrona Reyes, now also deceased, executed before the notary D. Florencio Gonzales Diez Paras, C. J., Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Bautista a document of gift in favor of her son D. Leonardo Osorio, the plaintiff, Angelo, Labrador, and Concepcion, JJ., concur. giving to him one-half of her share in the one-third part which belonged to her husband in the shipping business of Ynchausti & Co., a donation which Republic of the Philippines was duly accepted by the donee D. Leonardo Osorio, who signed said SUPREME COURT document with the plaintiff. On that date, February 28, 1914, the estate of Manila D. Antonio Osorio was not yet distributed among his heirs, and the donor Da. Petrona Reyes in order to correct the error in said document, wherein it was stated that said half was adjudicated to her as part of her conjugal EN BANC property, when the partition was yet being effected, executed another document dated July 3, 1915, maintaining said donation in effect in the G.R. No. L-16544 March 30, 1921 sense that she ceded and donated to her son D. Leonardo Osorio, for the same reasons stated in the document of February 28, 1914, al interest or LEONARDO OSORIO, plaintiff-appellee, participation in said shipping business of Ynchausti & Co., which was vs. adjudicated to her in the division of the estate of D. Antonio Osorio, which TOMASA OSORIO, administratrix of the estate of Petrona Reyes, division was approved by the Court of First Instance of Cavite on May 10, and THE YNCHAUSTI STEAMSHIP CO., defendants-appellants. 1915.

Fernandez and Ansaldo for appellants. After the death of D. Antonio Osorio and before the distribution of the Carlos Ledesma for appellee. estate, Ynchausti & Co. purchased the steamer Governor Forbes and recognized the heirs of D. Antonio Osorio as having an interest to the VILLAMOR, J.: extent of one-third in the ownership and business of said steamer. It was agreed upon by all the interested parties that the share of Da. Petrona The plaintiff seeks to recover 610 shares of stock of "Ynchausti Steamship Reyes, widow of Osorio, in the vessel Governor Forbes, at the time of the Co." and the dividends corresponding to them, which were included in the incorporation of "The Ynchausti Steamship Co." was P61,000, equivalent to inventory of the properties of the deceased Da. Maria Petrona Reyes, 610 shares of stock of said corporation. Said sum was deposited with the whose estate is administered by the defendant. The facts of this case are: Steamship Co. until the final settlement of the question that had arisen between the heirs of Da. Petrona Reyes as to the ownership thereof for, while the plaintiff alleges that, by virtue of the donation made in his favor D. Antonio Osorio had formed with Ynchausti & Co., a joint account by Da. Petrona Reyes, he is the owner of said shares and of their value association for the exploitation of the shipping business, he being the which is P61,000; the defendant on the other hand contends that said owner of the one-third of the company's capital. This capital amounted to shares are not included in the donation in question and belong to the heirs P500,000, of which P166,666.66, that is, one-third belonged to D. Antonio of Da. Petrona Reyes. Such as the facts which gave rise to this litigation. Osorio. Upon his death, his heirs agreed to authorize the defendant Da. Tomasa Osorio, then administratrix of the estate of the deceased, to present a project of partition, and said administratix inserted in the project The trial court rendered judgment in the case, declaring that the 610 with the consent of all the heirs, among the properties which belonged to shares of stock in dispute and their dividends belong to the plaintiff, and ordered the defendant Da. Tomasa Osorio, administratrix of the estate of 3. That in consideration of the continuous services and attention Da. Petrona Reyes, to exclude them from the inventory and her accounts, received by me from my son D. Leonardo Osorio, of age, married and the other defendant "The Ynchausti Steamship Co." to inscribe them in and a resident of Cavite also, and because of the affection he has the name of the plaintiff D. Leonardo Osorio, delivering to him the always shown and still shows me, as well as because of the dividends corresponding thereto, and denied the counterclaim for the sum number of children that he has, I make a free and expressed of P45,000, on the ground that said sum represents the dividends donation to my said son D. Leonardo Osorio of all my interest and corresponding to the P94,000 adjudicated to Da. Petrona Reyes, in the participation in said company "Ynchausti and Co." which is neither partition of the estate of D. Antonio Osorio, and donated by her to the transferred nor burdened in any manner whatever. defendant in the counterclaim. 4. I also declare that the present donation does not in any way The case having been appealed to this court, counsel for the defendant prejudice the right which may accrue to my other children with and appellant, in summing up their arguments in support of the errors respect to inheriting my property and that therefore I can effect assigned in their brief, maintain the two following propositions: this donation, with all liberty, as I reserve for myself what is sufficient for me to live on in the manner which corresponds to my 1. The donation made by Da. Petrona Reyes in favor of the plaintiff social position and needs. was of no value and effect; and 5. In turn, I, Leonardo Osorio, of age, married and a resident of the 2. That, supposing said donation valid, the 610 shares of stock, the Province of Cavite, state my conformity and acceptance of said value of which is P61,000, cannot be considered as included donation which my dear mother makes to me, for which I am among them. greatly thankful to her.

The document of donation dated February 28, 1914, attacked by the In witness whereof we sign the present document in triplicate at appellant, is as follows: Manila, Philippine Islands, this twenty-eighth day of February, nineteen hundred and fourteen. Know all me by these presents: That I, Petrona Reyes, of age, widow of D. Antonio Osorio and resident of the Province of Cavite, (Sgd.) PETRONA REYES. Philippine Islands, being in possession of all my senses, freely and voluntarily state: LEONARDO OSORIO.

1. That my husband, the deceased D. Antonio Osorio, was a Signed in the presence of: shareholder to the extent of one-third in the joint account association "Ynchausti & Co." of this place, which is engaged in the (Sgd.) EUSEBIO ALBA. business of buying vessels and in the exploitation of six steam SALVADOR BARRIOS. vessels acquired from the Compañia Maritima, the article of association of said joint account association having been executed Acknowledged before the notary public D. Florencio Gonzales Diez on in the city of Manila on July 3, 1906, before the notary public D. February 28, 1914. Florencio Gonzales Diez. The document rectifying the ratifying the preceding is literally as follows: 2. That upon the death of my husband D. Antonio Osorio and upon the partition of his estate, there was adjudicated to me as conjugal Know all men by these presents: That I, Petrona Reyes, of age, widow of D. property, one-half of said one-third part in the business referred to, Antonio Osorio and resident of the Province of Cavite, Philippine Islands, the other half thereof going to our four surviving children, such being in the full possession of my senses, freely and voluntarily declare: being the present condition of our interest in said company. 1. That on February 28, 1914, before the notary public of Manila, D. To close these fundamental ideas which the spirit of articles 634 Florencio Gonzales Diez, I executed a document of donation in and 635 develops we must fix our attention to the definition which favor of my son D. Leonardo Osorio, of one-half of the one-third the Code gives of future properties. They are those of which the part which my deceased husband had in certain shipping business donor cannot dispose at the time of making the donation. This of the association "Ynchausti & Co." definition in reality includes all properties which belong to others at the time of the donation, although they may or may not later 2. That in said document I stated, through error, that said half of belong to the donor, thus connecting two ideas which, although one-third part of the business referred to was adjudicated to me as lacking apparently in relation, are merged in reality in the subject my part of the conjugal property in the partition of the properties which we examine and which gives assurance to their application. left by my deceased husband, when the truth was that said Article 635 refers to the properties of third persons but it may be partition had not yet been put in proper form or finished. said that id does so in relation to a time to come; there can be properties which may latter belong to the donor; but these 3. That in order to correct said error, I so state, declaring however properties cannot be donated, because they are not at present his in any event that I make said donation subsisting in the sense that properties, because he cannot dispose of them at the moment of I cede and donate to my side son D. Leonardo Osorio, in making the donation. The usufructuary for life or for a determined consideration of the same causes mentioned in said document of number of years of a vineyard may donate said usufruct to the February 28, 1914, all interest or share in said shipping business of whole extent that it belongs to him but never the property itself. Ynchausti & Co. which was adjudicated to me in the partition of the The bare owner of said vineyard may donate his right of course; estate of my deceased husband, and approved by the Court of First but he may also donate the usufruct which corresponds to the time Instance of Cavite, on May 10, 1915. that it will go back to him, because the case refers to a vested right of which he may dispose at the time of the donation. In witness whereof I sign the present document in triplicate of Cavite on July 3, 1915. It is alleged that the donation made by Da. Petrona Reyes is void because she donated on February 28, 1914, a future property, such as the share in the business of the deceased Osorio, which was adjudicated to her on May (Sgd. by): 10, 1915, and because in 1914 she did not have the right to all or part of the share which her deceased husband had in the shipping business of PETRONA REYES. Ynchausti & Co.

Signed in the presence of: Carefully examining said article 635 of the Civil Code, in relation to the worthy opinion of the commentator Manresa, we believe that the future (Sgd.) CARLOS LEDESMA. properties, the donation of which is prohibited by said article, are those ISAURO GABALDON. belonging to other, which, as such, cannot be the object of the disposal by the donor; but the properties of an existing inheritance as those of the In support of the first proposition, the appellant invokes as the legal case at bar, cannot be considered as another's property with relation to provision violated, article 635 of the Civil Code, which says: the heirs who through a fiction of law continue the personality of the owner. Nor do they have the character of future property because the died A donation can not include future property. before 1912, his heirs acquired a right to succeed him from the moment of his death, because of the principle announced in article 657 and applied by article 661 of the Civil Code, according to which the heirs succeed the By future property is understood that of which the donor can not deceased by the mere fact of his death. More of less time may elapse dispose at the time of making the donation. before the heirs enter into the possession of the hereditary property, but this is not an obstacle, for the acquisition of said property retroacts in any Commenting on article 635 of the Civil Code, Manresa says, among other event to the moment of death, according to article 989 of the Civil Code. things: The right is acquired although subject to the adjudication of the That Da. Maria Petrona Reyes did not donate to the plaintiff more corresponding hereditary portion. that her share in the shipping business of the firm Ynchausti & Co. which was adjudicated to her in the partition of the property of D. Furthermore the Civil Code does not prohibit absolutely that future Antonio Osorio and that said share amounts to P94,000. inheritance should be the object of agreement, for there are certain cases (arts. 177, 827, 831, and 1331) in which agreements may be made as to This admission of the defendant is conclusive, and makes it unnecessary them, beside that indicated in article 1271, and it may be deduced that an for us to enter into another discussion in order to deduce that Da. Petrona inheritance already existing, which is no longer future from the moment of Reyes had in 1914 a right to a certain part of the interest of the deceased death of the predecessor, may legally be the object of contract. A donation Osorio in the shipping business of the firm Ynchausti & Co., and could being of a contractual nature, inasmuch as for its efficacy the concurrence donate it, as she did, to her son D. Leonardo Osorio. of two wills is required, that of the donor and the donee, we believe that which may be the object of contract may also be the object of a donation. The allegation that the document of July 3, 1915, is void, because it does Ubi eadem est ratio, ibi est eadem legis dispositio. We conclude that the not show the acceptance of the donee, is of no importance, because of the donor Da. Petrona Reyes, on February 28, 1912, and could legally dispose conclusion we have reached in discussing the document of donation of of her right through an act of liberality, as she had done. February 28, 1914. In the second document, the donor only tried to correct what she believed to be an error in the first, wherein it is stated that in the With respect to the point that Da. Petrona Reyes did not have in 1914 any partition of the property of her husband there was adjudicated to her the right to all or part of the share of her deceased husband in the shipping part of the interest in the shipping business of Ynchausti & Co. which she business of Ynchausti and Co., it must be observed that in the project of donated to her son Leonardo, when in fact said partition was yet pending. partition of the property of D. Antonio Osorio the following appears: After its approval by the Court of First Instance of Cavite, the donor executed the document of 1915, ratifying and correcting the document of The widow of the testator, Maria Petrona Reyes, her children Feliza, donation. She did not make a new donation. She executed a personal act Tomasa, and Leonardo and her granddaugther Soledad which did not require the concurrence of the donee. It is the duty of the Encarnacion Osorio y San Agustin are at present all living and are donee, in order that the donation may produce legal effect, to accept to the only heirs of the deceased. the donation and notify the donor thereof. The acceptance is necessary because nobody is obliged to receive a benefit against his will. And all this The testator declares that all property left by him was acquired was complied with in the document of 1914. The wills of the donor and of during his marriage with Petrona Reyes. the donee having concurred, the donation, as a mode of transferring ownership, becomes perfect, according to article 623 of the Civil Code. The testator institutes as his only and universal heirs his said children and granddaugther, designates the parts which each of We will not pass to the second proposition of the appellant, that is, that the them must receive as legitime, betterment, and legacy, leaves to 610 shares, which are the subject matter of the suit, cannot be considered the disposition of his widow and amount equivalent to that set as included in the donation made by Da. Petrona Reyes in favor of the aside by him in payment of one-half part of the conjugal property plaintiff, supposing that said donation was valied. The reasons alleged by and orders that the remainder should be equally distributed among the appellant are: (1) That the steam vessel Governor Forbes was his heirs. purchased after the death of D. Antonio Osorio, with money borrowed and furnished by the heirs individually and not by the estate, and (2) that the plaintiff appellee has recognized that the capital used in the steamer We do not have before us the will of D. Antonio Osorio but supposing that Forbes is distinct from the money used in the purchase of other vessels in he had left no property but the share which he had in the shipping which the deceased Osorio had an interest. business of Ynchausti & Co., can it be denied that the donor by law had the right to half of said share as her part of the conjugal property? Clearly not. The defendant in her answer says: The question whether the streamer Governor Forbes was or was not purchased with money furnished by Ynchausti and the heirs of Osorio, indepedently of that former partnership in which the deceased Osorio had an interest, is one of the fact and must be resolved in view of the evidence one-third of the shipping business of Ynchausti & Co., which one-half part adduced at the trial. accrued to the widow in the distribution of the properties of Osorio; and the widow Da. Petrona Reyes having disposed of this half, donating it to her D. Julio Gonzales, secretary and accountant of the firm Ynchausti, witness son D. Leonardo Osorio, it clearly results, in our opinion, that the sum of for the defendant, states that the Forbes was purchased with money which 61,000, or the corresponding shares of the new corporation "The Ynchausti the shipping business of Unchaisti & Co. had. The appellant herself admits Steamship Co." are included in said donation, and therefore belong to the that his vessel took part in the general shipping business of Ynchausti & plaintiff-appellee. Co. for no new partnership was constituted for the purchase thereof, and, after its acquisition the Ynchausti firm accounted to the estate of D. The other reason alleged by the appellant in support of her contention is Antonio Osorio for the profits obtained and the dividends to be distributed that the plaintiff has recognized in his letter addressed to the defendant and no separate account was made of the earnings of the vessel, but only corporation, and inserted in the answer presented by the latter that the a general account, including the profits obtained in the shipping business, Forbes was acquired with money different from that of the joint account in which the Governor Forbes was but one of several vessels. D. Joaquin association theretofore mentioned. We have carefully read the letter in Elizalde, manager of the firm Ynchausti & Co., by agreement of the parties question and what appears is that said plaintiff agreed that the P61,000 and with the approval of the court, made a deposition before the notary should be deposited with Ynchausti & Co., as trustee, to be distributed with public D. Florencio Gonzales Diez, stating that when the steamer Forbes its accumulated dividends, when the question between the heirs of Da. was acquired in 1912, the Ynchausti firm did not bring in any new capital, Petrona Reyes had already been terminated, that is to say, according to but obtained money for its purchase by mortgaging the vessel itself and the result of the present suit. There is nothing in said letter which indicates other vesseles of the company; and that the heirs of D. Antonio Osorio did how the Governor Forbes was acquired. not bring in any new capital for the purchase of the vessel, but signed jointly with Ynchausti & Co. with the others, except Da. Soledad Osorio, the With respect to the counterclaim of P45,609,91, we are of the opinion that guaranty which the bank required. the evidence justifies the conclusion of the trial court that they are the profits or dividends accruing to the P94,000, which were adjudicated to the In our opinion the evidence shows conclusively that the vessel Governor widow Da. Petrona Reyes in the distribution of the estate of the deceased Forbes forms part of the shipping business of Ynchausti & Co. in which D. Osorio and which were donated by her to the plaintiff, and as such profits Antonio Osorio and his estate had an interest. It is no argument against they belong to the latter, upon the principle of law that ownership of this conclusion that the heirs of Osorio signed with Ynchausti & Co. the property gives right by accession to all that it produces, or is united or guaranty required by the bank where the money used in the purchase of incorporated thereto, naturally or artificially. (Art. 353 of the Civil Code.) the Forbes was taken: (1) Because the guaranty is for the purpose only for securing the payment of the amount indebted and not for excluding the In view of what has been said, the judgment appealed from should be, as it estate of Osorio from the result of that banking operation; (2) because, is hereby, affirmed, with costs against the appellant. So ordered. besides said guaranty, the other vessels of the joint account association of Osorio and Ynchausti & Co. were mortgage; (3) because no new Mapa, C.J., Araullo, Street and Malcolm, JJ., concur. partnership was formed between Ynchausti & Co. and the heirs of Osorio for the purchase of the vessel Forbes; and (4) because, when Unchausti & Co. agreed with the heirs of Osorio in that his share in the steamer Forbes Republic of the Philippines was P108,333.33, this sum was distributed among said heirs, including Da. SUPREME COURT Soledad Osorio who did not sign the guaranty, the accruing to each P11, Manila 833.33 and to the widow Da. Petrona Reyes P61,000, which is the object of this suit. EN BANC

All of the above shows that the estate of Osorio had a one-third part of the G.R. No. L-15897 February 26, 1965 steamer Forbes represented by the capital which was distributed among the heirs, there accruing to the widow, by agreement of the interested parties, the sum of P61,000. And this sum being part of the one-half of AUREA ESQUEJO, plaintiff-appellant, realmente es el objeto del litigio es aquel terreno que Cerapio vs. Fortaleza compro de su padre Pablo Fortaleza, mediante escritura CERAPIO FORTALEZA and DANIEL FORTALEZA, defendants-appellees. publica, EXHIBITO "F", en el año de 1948, en donde el vendedor Pablo Fortaleza declaro o hizo constar que el terreno que vendio no Raymundo Meris-Morales for plaintiff-appellant. esta registrado bajo la Ley 496. Benjamin A. Rillera for defendants-appellees. As stated in the beginning, this action was originally filed in the Court of REGALA, J.: First Instance of Pangasinan. The appeal in this case was taken directly to this Court, on the ground that only questions of law would be raised. But, This is an action for the recovery of property consisting of a residential as shown above, the findings of the lower court are disputed and questions land situated in Sta. Maria, Binalonan, Pangasinan. It was originally filed in of fact are actually raised.1äwphï1.ñët the Court of First Instance of Pangasinan by Aurea Esquejo against Cerapio and Daniel Fortaleza. Aurea Esquejo's statement in her notice of appeal that she would raise only questions of law should be construed as a waiver of all questions of facts. The trial court found that this residential lot (together with three parcels of (Rule 42, Sec. 2, Rev. Rules of Court; 2 Moran 394-395 [1965]). Therefore, rice land situated in barrio Manguzmana of the same town and province) she cannot now dispute the factual finding of the lower court that the had been donated by Pablo Fortaleza to Aurea Esquejo in consideration of residential land purportedly given to her under the deed of donation the latter's marriage to the donor's son, Cresenciano. Nevertheless, the propter nuptias is the same land covered by Original Certificate of Title No. court denied recovery of the residential land on the ground that Pablo 4322. On this point, the lower court found: Fortaleza, the supposed donor, did not own this land, the same being the registered property of Pedro Fortaleza whose ownership is evidenced by ... After examining both documents, the Court is convinced that Original Certificate of Title No. 4322. According to the lower court, Cerapio they refer to the same land in question notwithstanding some Fortaleza acquired this land from the heirs of Pedro Fortaleza as shown by discrepancies in their boundaries on the north, south and east but a deed of sale (Exh. "2"). their areas are practically the same. The reason for these discrepancies may be attributable to the change of owners Aurea Esquejo excepts to these findings of the trial court. She contends adjacent thereto. This is shown by tax declaration No. 14362, that the lot donated to her is different from the lot covered by Original marked Exhibit "3". Besides, the defendant Cerapio Fortaleza did Certificate of Title No. 4322 which the court found had been sold to Cerapio not dispute the identity of the residential land in question Fortaleza by the heirs of Pedro Fortaleza, the registered owner. Her version described in paragraph 5 (No. 1) of the amended complaint in is that after donating the residential lot to her Pablo Fortaleza relation to Lot 700. ... subsequently conveyed the same property to Cerapio Fortaleza, by means of a deed of sale marked Exh. "F". According to her, when this action was The facts being so, We agree with the following conclusion of the lower filed and Cerapio Fortaleza realized that he could not rely on the deed of court: sale (Exh. "F"), Cerapio Fortaleza procured the execution of another deed of sale (Exh. "2"). She contends that this deed of sale (Exh. "2") is Under these circumstances, if the residential land was the simulated and refers to a different land registered in the name of Pedro registered property of Pedro Fortaleza, how did Pablo Fortaleza Fortaleza, whereas the land donated to her and subsequently sold to acquire the same? The plaintiff failed to adduce evidence to show Cerapio Fortaleza is unregistered and was formerly the property of Pablo how her donor acquired it from the registered owner. Such being Fortaleza. She goes on to say that — the case, Pablo Fortaleza has no right, title or interest in this Lot 700 which he would lawfully convey to the donee under the deed En el dia de la vista de la causa, Cerapio Fortaleza presento como of donation, because it is a principle of law that nobody can prueba a su favor esta escritura ficticia de compraventa, EXHIBITO dispose of that which does not belong to him. ... "2", para justificar su propriedad, y ahora Cerapio Fortaleza sostiene que el terreno en litigio es el terreno cubierto por el WHEREFORE, the decision of the lower court is hereby affirmed, without Certificado Original de Titulo No. 4322; siendo que el terreno que pronouncement as to costs. Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.

SECOND DIVISION D E C I S I O N

TINGA, J.: PRUDENTIAL BANK, G.R. No. 150197

Petitioner,

Present: Before us is a petition for review on certiorari under Rule 45 of the

Rules of Court. Petitioner Prudential Bank seeks the reversal of the

PUNO, J., Decision[1] of the Court of Appeals dated 27 September 2001 in CA-G.R. CV No. 59543 affirming the Decision of the Regional Trial Court (RTC) of Chairman, Pasig City, Branch 160, in favor of respondents. - versus - AUSTRIA-MARTINEZ,

CALLEJO, SR., Respondents, spouses Don A. Alviar and Georgia B. Alviar, are the TINGA, and registered owners of a parcel of land in San Juan, Metro Manila, covered by

CHICO-NAZARIO, JJ. Transfer Certificate of Title (TCT) No. 438157 of the Register of Deeds of Rizal. On 10 July 1975, they executed a deed of real estate mortgage in DON A. ALVIAR and GEORGIA favor of petitioner Prudential Bank to secure the payment of a loan worth

B. ALVIAR, P250,000.00.[2] This mortgage was annotated at the back of TCT No. 438157. On 4 August 1975, respondents executed the corresponding Respondents. Promulgated: promissory note, PN BD#75/C-252, covering the said loan, which provides that the loan matured on 4 August 1976 at an interest rate of 12% per annum with a 2% service charge, and that the note is secured by a real July 28, 2005 estate mortgage as aforementioned.[3] Significantly, the real estate mortgage contained the following clause: x------x P545,000.000. As provided in the note, the loan is secured by “Clean- Phase out TOD CA 3923,” which means that the temporary overdraft That for and in consideration of certain loans, incurred by Donalco Trading, Inc. with petitioner is to be converted into an overdraft and other credit accommodations obtained from the Mortgagee by the Mortgagor and/or ______ordinary loan in compliance with a Central Bank circular directing the hereinafter referred to, irrespective of number, as DEBTOR, discontinuance of overdrafts.[7] and to secure the payment of the same and those that may hereafter be obtained, the principal or all of which is hereby fixed at Two Hundred Fifty Thousand (P250,000.00) Pesos, Philippine Currency, as well as those that the Mortgagee may extend to the Mortgagor and/or DEBTOR, including interest and expenses or any other obligation On 16 March 1977, petitioner wrote Donalco Trading, Inc., informing owing to the Mortgagee, whether direct or indirect, the latter of its approval of a straight loan of P545,000.00, the proceeds of principal or secondary as appears in the accounts, books and records of the Mortgagee, the Mortgagor does hereby which shall be used to liquidate the outstanding loan of P545,000.00 TOD. transfer and convey by way of mortgage unto the The letter likewise mentioned that the securities for the loan were the Mortgagee, its successors or assigns, the parcels of land which are described in the list inserted on the back of this deed of assignment on two promissory notes executed by Bancom Realty document, and/or appended hereto, together with all the Corporation with Deed of Guarantee in favor of A.U. Valencia and Co. and buildings and improvements now existing or which may hereafter be erected or constructed thereon, of which the the chattel mortgage on various heavy and transportation equipment.[8] Mortgagor declares that he/it is the absolute owner free from all liens and incumbrances. . . .[4]

On 06 March 1979, respondents paid petitioner P2,000,000.00, to be

applied to the obligations of G.B. Alviar Realty and Development, Inc. and for the release of the real estate mortgage for the P450,000.00 loan On 22 October 1976, Don Alviar executed another promissory note, PN covering the two (2) lots located at Vam Buren and Madison Streets, North BD#76/C-345 for P2,640,000.00, secured by D/A SFDX #129, signifying Greenhills, San Juan, Metro Manila. The payment was acknowledged by that the loan was secured by a “hold-out” on the mortgagor’s foreign petitioner who accordingly released the mortgage over the two properties. currency savings account with the bank under Account No. 129, and that [9] the mortgagor’s passbook is to be surrendered to the bank until the amount secured by the “hold-out” is settled.[5]

On 15 January 1980, petitioner moved for the extrajudicial foreclosure

of the mortgage on the property covered by TCT No. 438157. Per On 27 December 1976, respondent spouses executed for Donalco petitioner’s computation, respondents had the total obligation of Trading, Inc., of which the husband and wife were President and Chairman P1,608,256.68, covering the three (3) promissory notes, to wit: PN of the Board and Vice President,[6] respectively, PN BD#76/C-430 covering BD#75/C-252 for P250,000.00, PN BD#76/C-345 for P382,680.83, and PN BD#76/C-340 for P545,000.00, plus assessed past due interests and I. The trial court erred in holding that the real estate mortgage covers only the penalty charges. The public auction sale of the mortgaged property was promissory note BD#75/C-252 for the sum of set on 15 January 1980.[10] P250,000.00.

II. The trial court erred in holding that the Respondents filed a complaint for damages with a prayer for the promissory note BD#76/C-345 for P2,640,000.00 issuance of a writ of preliminary injunction with the RTC of Pasig,[11] (P382,680.83 outstanding principal balance) is not covered by the real estate mortgage by expressed claiming that they have paid their principal loan secured by the mortgaged agreement. property, and thus the mortgage should not be foreclosed. For its part, III. The trial court erred in holding that petitioner averred that the payment of P2,000,000.00 made on 6 March Promissory Note BD#76/C-430 for P545,000.00 is 1979 was not a payment made by respondents, but by G.B. Alviar Realty not covered by the real estate mortgage. and Development Inc., which has a separate loan with the bank secured by IV. The trial court erred in holding that the a separate mortgage.[12] real estate mortgage is a contract of adhesion.

V. The trial court erred in holding On 15 March 1994, the trial court dismissed the complaint and ordered defendant-appellant liable to pay plaintiffs- the Sheriff to proceed with the extra-judicial foreclosure.[13] Respondents appellees attorney’s fees for P20,000.00.[16] sought reconsideration of the decision.[14] On 24 August 1994, the trial court issued an Order setting aside its earlier decision and awarded The Court of Appeals affirmed the Order of the trial court but attorney’s fees to respondents.[15] It found that only the P250,000.00 deleted the award of attorney’s fees.[17] It ruled that while a continuing loan is secured by the mortgage on the land covered by TCT No. 438157. loan or credit accommodation based on only one security or mortgage is a On the other hand, the P382,680.83 loan is secured by the foreign common practice in financial and commercial institutions, such agreement currency deposit account of Don A. Alviar, while the P545,000.00 obligation must be clear and unequivocal. In the instant case, the parties executed was an unsecured loan, being a mere conversion of the temporary different promissory notes agreeing to a particular security for each loan. overdraft of Donalco Trading, Inc. in compliance with a Central Bank Thus, the appellate court ruled that the extrajudicial foreclosure sale of the circular. According to the trial court, the “blanket mortgage clause” relied property for the three loans is improper.[18] upon by petitioner applies only to future loans obtained by the mortgagors, and not by parties other than the said mortgagors, such as Donalco The Court of Appeals, however, found that respondents have not Trading, Inc., for which respondents merely signed as officers thereof. yet paid the P250,000.00 covered by PN BD#75/C-252 since the payment of P2,000,000.00 adverted to by respondents was issued for the On appeal to the Court of Appeals, petitioner made the following obligations of G.B. Alviar Realty and Development, Inc.[19] assignment of errors: Aggrieved, petitioner filed the instant petition, reiterating the assignment Moreover, petitioner insists that respondents attempt to evade of errors raised in the Court of Appeals as grounds herein. foreclosure by the expediency of stating that the promissory notes were Petitioner maintains that the “blanket mortgage clause” or the executed by them not in their personal capacity but as corporate officers. “dragnet clause” in the real estate mortgage expressly covers not only the It claims that PN BD#76/C-430 was in fact for home construction and P250,000.00 under PN BD#75/C-252, but also the two other promissory personal consumption of respondents. Thus, it states that there is a need notes included in the application for extrajudicial foreclosure of real estate to pierce the veil of corporate fiction.[30] mortgage.[20] Thus, it claims that it acted within the terms of the mortgage contract when it filed its petition for extrajudicial foreclosure of real estate mortgage. Petitioner relies on the cases of Lim Julian v. Finally, petitioner alleges that the mortgage contract was executed by Lutero,[21] Tad-Y v. Philippine National Bank,[22] Quimson v. Philippine respondents with knowledge and understanding of the “dragnet clause,” National Bank,[23] C & C Commercial v. Philippine National Bank,[24] being highly educated individuals, seasoned businesspersons, and political Mojica v. Court of Appeals,[25] and China Banking Corporation v. Court of personalities.[31] There was no oppressive use of superior bargaining Appeals,[26] all of which upheld the validity of mortgage contracts power in the execution of the promissory notes and the real estate securing future advancements. mortgage.[32]

Anent the Court of Appeals’ conclusion that the parties did not intend to include PN BD#76/C-345 in the real estate mortgage because the same was specifically secured by a foreign currency deposit account, For their part, respondents claim that the “dragnet clause” cannot be petitioner states that there is no law or rule which prohibits an obligation applied to the subsequent loans extended to Don Alviar and Donalco from being covered by more than one security.[27] Besides, respondents Trading, Inc. since these loans are covered by separate promissory notes even continued to withdraw from the same foreign currency account even that expressly provide for a different form of security.[33] They reiterate while the promissory note was still outstanding, strengthening the belief the holding of the trial court that the “blanket mortgage clause” would that it was the real estate mortgage that principally secured all of apply only to loans obtained jointly by respondents, and not to loans respondents’ promissory notes.[28] As for PN BD#76/C-345, which the obtained by other parties.[34] Respondents also place a premium on the Court of Appeals found to be exclusively secured by the Clean-Phase out finding of the lower courts that the real estate mortgage clause is a TOD 3923, petitioner posits that such security is not exclusive, as the contract of adhesion and must be strictly construed against petitioner “dragnet clause” of the real estate mortgage covers all the obligations of bank.[35] the respondents.[29]

The instant case thus poses the following issues pertaining to: (i) the validity of the “blanket mortgage clause” or the “dragnet clause”; (ii) the coverage of the “blanket mortgage clause”; and consequently, (iii) the Besides, petitioner agreed to the terms of the promissory note. If propriety of seeking foreclosure of the mortgaged property for the non- respondents were indeed the real parties to the loan, petitioner, a big, payment of the three loans. well-established institution of long standing that it is, should have insisted that the note be made in the name of respondents themselves, and not to Donalco Trading Inc., and that they sign the note in their personal capacity and not as officers of the corporation. At this point, it is important to note that one of the loans sought to be included in the “blanket mortgage clause” was obtained by respondents for Donalco Trading, Inc. Indeed, PN BD#76/C-430 was executed by respondents on behalf of Donalco Trading, Inc. and not in their personal Now on the main issues. capacity. Petitioner asks the Court to pierce the veil of corporate fiction and hold respondents liable even for obligations they incurred for the corporation. The mortgage contract states that the mortgage covers “as A “blanket mortgage clause,” also known as a “dragnet clause” in well as those that the Mortgagee may extend to the Mortgagor and/or American jurisprudence, is one which is specifically phrased to subsume all DEBTOR, including interest and expenses or any other obligation owing to debts of past or future origins. Such clauses are “carefully scrutinized and the Mortgagee, whether direct or indirect, principal or secondary.” Well- strictly construed.”[38] Mortgages of this character enable the parties to settled is the rule that a corporation has a personality separate and distinct provide continuous dealings, the nature or extent of which may not be from that of its officers and stockholders. Officers of a corporation are not known or anticipated at the time, and they avoid the expense and personally liable for their acts as such officers unless it is shown that they inconvenience of executing a new security on each new transaction.[39] A have exceeded their authority.[36] However, the legal fiction that a “dragnet clause” operates as a convenience and accommodation to the corporation has a personality separate and distinct from stockholders and borrowers as it makes available additional funds without their having to members may be disregarded if it is used as a means to perpetuate fraud execute additional security documents, thereby saving time, travel, loan or an illegal act or as a vehicle for the evasion of an existing obligation, the closing costs, costs of extra legal services, recording fees, et cetera.[40] circumvention of statutes, or to confuse legitimate issues.[37] PN Indeed, it has been settled in a long line of decisions that mortgages given BD#76/C-430, being an obligation of Donalco Trading, Inc., and not of the to secure future advancements are valid and legal contracts,[41] and the respondents, is not within the contemplation of the “blanket mortgage amounts named as consideration in said contracts do not limit the amount clause.” Moreover, petitioner is unable to show that respondents are for which the mortgage may stand as security if from the four corners of hiding behind the corporate structure to evade payment of their the instrument the intent to secure future and other indebtedness can be obligations. Save for the notation in the promissory note that the loan was gathered.[42] for house construction and personal consumption, there is no proof showing that the loan was indeed for respondents’ personal consumption.

The “blanket mortgage clause” in the instant case states: milieu from the instant case. There, the subsequent loans were not covered by any security other than that for the mortgage deeds which That for and in consideration of certain loans, uniformly contained the “dragnet clause.” overdraft and other credit accommodations obtained from the Mortgagee by the Mortgagor and/or ______hereinafter referred to, irrespective of number, as DEBTOR, and to secure the payment of the same and those that may hereafter be obtained, the principal or all of which In the case at bar, the subsequent loans obtained by respondents is hereby fixed at Two Hundred Fifty Thousand (P250,000.00) Pesos, Philippine Currency, as well as were secured by other securities, thus: PN BD#76/C-345, executed by Don those that the Mortgagee may extend to the Alviar was secured by a “hold-out” on his foreign currency savings Mortgagor and/or DEBTOR, including interest and expenses or any other obligation owing to the account, while PN BD#76/C-430, executed by respondents for Donalco Mortgagee, whether direct or indirect, principal or Trading, Inc., was secured by “Clean-Phase out TOD CA 3923” and secondary as appears in the accounts, books and records of the Mortgagee, the Mortgagor does hereby transfer eventually by a deed of assignment on two promissory notes executed by and convey by way of mortgage unto the Mortgagee, its Bancom Realty Corporation with Deed of Guarantee in favor of A.U. successors or assigns, the parcels of land which are described in the list inserted on the back of this document, Valencia and Co., and by a chattel mortgage on various heavy and and/or appended hereto, together with all the buildings transportation equipment. The matter of PN BD#76/C-430 has already and improvements now existing or which may hereafter be erected or constructed thereon, of which the Mortgagor been discussed. Thus, the critical issue is whether the “blanket declares that he/it is the absolute owner free from mortgage” clause applies even to subsequent advancements for which all liens and incumbrances. . . .[43] (Emphasis supplied.) other securities were intended, or particularly, to PN BD#76/C-345.

Under American jurisprudence, two schools of thought have Thus, contrary to the finding of the Court of Appeals, petitioner and emerged on this question. One school advocates that a “dragnet clause” respondents intended the real estate mortgage to secure not only the so worded as to be broad enough to cover all other debts in addition to the P250,000.00 loan from the petitioner, but also future credit facilities and one specifically secured will be construed to cover a different debt, advancements that may be obtained by the respondents. The terms of the although such other debt is secured by another mortgage.[44] The above provision being clear and unambiguous, there is neither need nor contrary thinking maintains that a mortgage with such a clause will not excuse to construe it otherwise. secure a note that expresses on its face that it is otherwise secured as to its entirety, at least to anything other than a deficiency after exhausting the security specified therein,[45] such deficiency being an indebtedness within the meaning of the mortgage, in the absence of a special contract The cases cited by petitioner, while affirming the validity of excluding it from the arrangement.[46] “dragnet clauses” or “blanket mortgage clauses,” are of a different factual that the note was secured by such chattel mortgage; (2) there was no reference in the second note or chattel mortgage indicating a connection The latter school represents the better position. The parties having conformed to the “blanket mortgage clause” or “dragnet clause,” it is between the real estate mortgage and the advance; (3) the mortgagor reasonable to conclude that they also agreed to an implied understanding signed the real estate mortgage by her name alone, whereas the second that subsequent loans need not be secured by other securities, as the subsequent loans will be secured by the first mortgage. In other words, note and chattel mortgage were signed by the mortgagor doing business the sufficiency of the first security is a corollary component of the “dragnet under an assumed name; and (4) there was no allegation by the bank, and clause.” But of course, there is no prohibition, as in the mortgage contract in issue, against contractually requiring other securities for the subsequent apparently no proof, that it relied on the security of the real estate loans. Thus, when the mortgagor takes another loan for which another mortgage in making the advance.[48] security was given it could not be inferred that such loan was made in reliance solely on the original security with the “dragnet clause,” but rather, on the new security given. This is the “reliance on the security test.” Indeed, in some instances, it has been held that in the absence of

clear, supportive evidence of a contrary intention, a mortgage containing a Hence, based on the “reliance on the security test,” the California “dragnet clause” will not be extended to cover future advances unless the court in the cited case made an inquiry whether the second loan was made document evidencing the subsequent advance refers to the mortgage as in reliance on the original security containing a “dragnet clause.” providing security therefor.[49] Accordingly, finding a different security was taken for the second loan no intent that the parties relied on the security of the first loan could be inferred, so it was held. The rationale involved, the court said, was that It was therefore improper for petitioner in this case to seek the “dragnet clause” in the first security instrument constituted a foreclosure of the mortgaged property because of non-payment of all the continuing offer by the borrower to secure further loans under the security three promissory notes. While the existence and validity of the “dragnet of the first security instrument, and that when the lender accepted a clause” cannot be denied, there is a need to respect the existence of the different security he did not accept the offer.[47] other security given for PN BD#76/C-345. The foreclosure of the mortgaged property should only be for the P250,000.00 loan covered by

PN BD#75/C-252, and for any amount not covered by the security for the In another case, it was held that a mortgage with a “dragnet second promissory note. As held in one case, where deeds absolute in clause” is an “offer” by the mortgagor to the bank to provide the security form were executed to secure any and all kinds of indebtedness that might of the mortgage for advances of and when they were made. Thus, it was subsequently become due, a balance due on a note, after exhausting the concluded that the “offer” was not accepted by the bank when a special security given for the payment of such note, was in the absence of subsequent advance was made because (1) the second note was secured a special agreement to the contrary, within the protection of the mortgage, by a chattel mortgage on certain vehicles, and the clause therein stated notwithstanding the giving of the special security.[50] This is recognition that while the “dragnet clause” subsists, the security specifically executed petitioner and with even more reason since having been accomplished by for subsequent loans must first be exhausted before the mortgaged respondents in the presence of petitioner’s personnel and approved by its property can be resorted to. manager, they could not have been unaware of the import and extent of such contracts.

One other crucial point. The mortgage contract, as well as the promissory notes subject of this case, is a contract of adhesion, to which Petitioner, however, is not without recourse. Both the Court of Appeals respondents’ only participation was the affixing of their signatures or and the trial court found that respondents have not yet paid the “adhesion” thereto.[51] A contract of adhesion is one in which a party P250,000.00, and gave no credence to their claim that they paid the said imposes a ready-made form of contract which the other party may accept amount when they paid petitioner P2,000,000.00. Thus, the mortgaged or reject, but which the latter cannot modify.[52] property could still be properly subjected to foreclosure proceedings for the unpaid P250,000.00 loan, and as mentioned earlier, for any deficiency after D/A SFDX#129, security for PN BD#76/C-345, has been exhausted,

The real estate mortgage in issue appears in a standard form, subject of course to defenses which are available to respondents. drafted and prepared solely by petitioner, and which, according to jurisprudence must be strictly construed against the party responsible for its preparation.[53] If the parties intended that the “blanket mortgage WHEREFORE, the petition is DENIED. The Decision of the Court of clause” shall cover subsequent advancement secured by separate Appeals in CA-G.R. CV No. 59543 is AFFIRMED. securities, then the same should have been indicated in the mortgage contract. Consequently, any ambiguity is to be taken contra proferentum, that is, construed against the party who caused the ambiguity which could Costs against petitioner. have avoided it by the exercise of a little more care.[54] To be more emphatic, any ambiguity in a contract whose terms are susceptible of different interpretations must be read against the party who drafted it,[55] SO ORDERED. which is the petitioner in this case.

Republic of the Philippines SUPREME COURT Manila Even the promissory notes in issue were made on standard forms prepared by petitioner, and as such are likewise contracts of adhesion. THIRD DIVISION

Being of such nature, the same should be interpreted strictly against G.R. No. 112483 October 8, 1999 8, 1962, Victor was substituted in place of Leoncio in the above-mentioned case, and it was he who moved for execution of judgment. On March 15, ELOY IMPERIAL, petitioner, 1962, the motion for execution was duly granted. vs. COURT OF APPEALS, REGIONAL TRIAL COURT OF LEGASPI CITY, Fifteen years thereafter, or on July 26, 1977, Victor died single and without CESAR VILLALON, JR., TERESA VILLALON, ANTONIO VILLALON, issue, survived only by his natural father, Ricardo Villalon, who was a AUGUSTO VILLALON, ROBERTO VILLALON, RICARDO VILLALON and lessee of a portion of the disputed land. Four years hence, or on ESTHER VILLALON, respondents. September 25, 1981, Ricardo died, leaving as his only heirs his two children, Cesar and Teresa Villalon. GONZAGA-REYES, J.: Five years thereafter, or sometime in 1986, Cesar and Teresa filed a Petitioner seeks to set aside the Decision of the Court of Appeals complaint for annulment of the donation with the Regional Trial Court of in C.A.-G.R. CV No. 31976 1, affirming the Decision of the Regional Trial Legazpi City, docketed as Civil Case No. 7646. Petitioner moved to dismiss Court of Legaspi City 2, which rendered inofficious the donation made by on the ground of res judicata, by virtue of the compromise judgment Leoncio Imperial in favor of herein petitioner, to the extent that it impairs rendered by the Court of First Instance of Albay. The trial court granted the the legitime of Victor Imperial, and ordering petitioner to convey to herein motion to dismiss, but the Court of Appeals reversed the trial court's order private respondents, heirs of said Victor Imperial, that portion of the and remanded the case for further proceedings. donated land proportionate to Victor Imperial's legitime. On October 18, 1989, Cesar and Teresa filed an amended complaint in the Leoncio Imperial was the registered owner of a 32,837-square meter parcel same case, Civil Case No. 7646, for "Annulment of Documents, of land covered by Original Certificate of Title No. 200, also known as Lot Reconveyance and Recovery of Possession" with the Regional Trial Court of 45 of the Cadastral Survey of Albay. On July 7, 1951, Leoncio sold the said Legazpi City, seeking the nullification of the Deed of Absolute Sale lot for P1.00 to his acknowledged natural son, petitioner herein, who then affecting the above property, on grounds of fraud, deceit and acquired title over the land and proceeded to subdivide it into several lots. inofficiousness. In the amended complaint, it was alleged that petitioner Petitioner and private respondents admit that despite the contract's caused Leoncio to execute the donation by taking undue advantage of the designation as one of "Absolute Sale", the transaction was in fact a latter's physical weakness and mental unfitness, and that the conveyance donation.1âwphi1.nêt of said property in favor of petitioner impaired the legitime of Victor Imperial, their natural brother and predecessor-in-interest. 4 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 In his Answer, petitioner: (1) alleged that Leoncio had conveyed sufficient Civil Case No. 1177, in the then Court of First Instance of Albay, on the property to Victor to cover his legitime, consisting of 563 hectares of ground that he was deceived by petitioner herein into signing the said agricultural land in Manito, Albay; (2) reiterated the defense of res judicata, document. The dispute, however, was resolved through a compromise and (3) raised the additional defenses of prescription and laches. agreement, approved by the Court of First Instance of Albay on November 3, 1961 3, under which terms: (1) Leoncio recognized the legality and Plaintiff Cesar Villalon died on December 26, 1989, while the case was validity of the rights of petitioner to the land donated; and (2) petitioner pending in the Regional Trial Court, and was substituted in this action by agreed to sell a designated 1,000-square meter portion of the donated his sons, namely, Antonio, Roberto, Augusto, Ricardo and Cesar, Jr., all land, and to deposit the proceeds thereof in a bank, for the convenient surnamed Villalon, and his widow, Esther H. Villalon. disposal of Leoncio. In case of Leoncio's death, it was agreed that the balance of the deposit will be withdrawn by petitioner to defray burial The RTC held the donation to be inofficious and impairing the legitime of costs. Victor, on the basis of its finding that at the time of Leoncio's death, he left no property other than the 32,837-square meter parcel of land which he On January 8, 1962, and pending execution of the above judgment, had donated to petitioner. The RTC went on further to state that Leoncio died, leaving only two heirs — the herein petitioner, who is his petitioner's allegation that other properties existed and were inherited by acknowledged natural son, and an adopted son, Victor Imperial. On March Victor was not substantiated by the evidence. 5 The legitime of Victor was determined by the trial court in this manner: be given by defendant a portion of 10,940 square meters thereof. Considering that the property donated is 32,837 square meters, one half of that or 16,418 square meters becomes In order to avoid further conflict, the 10,940 share to be the free portion of Leoncio which could be absorbed in the given to plaintiffs should include the portion which they are donation to defendant. The other half, which is also 16,418 presently occupying, by virtue of the extended lease to square meters is where the legitime of the adopted son their father Ricardo Villalon, where the bungalow in Victor Imperial has to be taken. question stands.

The proportion of the legitime of the legitimate child The remaining portion to be given to plaintiffs may come (including the adopted child) in relation to the from any other portion that may be agreed upon by the acknowledged natural child (defendant) is 10 is to 5[,] with parties, otherwise, this court will appoint a commissioner to the acknowledged natural child getting 1/2 of the legitime undertake the partition. of the legitimate (adopted) child, in accordance with Art. 895 of the New Civil Code which provides: The other 21,897 square meters should go to the defendant as part of his legitime and by virtue of the The legitime of each of the acknowledged reduced donation. natural children and each of the natural children by legal fiction shall consist of No pronouncement as to damages as they were not one-half of the legitime of each of the sufficiently proved. legitimate children or descendants. SO ORDERED. 8 From the 16,418 square meters left (after the free portion has been taken) plaintiffs are therefore entitled to 10,940 The Court of Appeals affirmed the RTC Decision in toto. square meters while defendant gets 5,420 square meters. 6 Before us, petitioner questions the following findings of respondent court: The trial court likewise held that the applicable prescriptive period is 30 7 (1) that there was no res judicata, there being no identity of parties and years under Article 1141 of the Civil Code , reckoned from March 15, cause of action between the instant case and Civil Case No. 1177; (2) that 1962, when the writ of execution of the compromise judgment in Civil Case private respondents had a right to question the donation; (3) that private 1177 was issued, and that the original complaint having been filed in 1986, respondents' action is barred by prescription, laches and estoppel; and (4) the action has not yet prescribed. In addition, the trial court regarded the that the donation was inofficious and should be reduced. defense of prescription as having been waived, this not being one of the issues agreed upon at pre-trial. 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 Thus, the dispositive portion of the RTC's Decision of December 13, 1990 cause of action. 9 A perusal of the records leads us to conclude that there reads: 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 WHEREFORE, premises considered, the Deed of Absolute Leoncio in his capacity as donor of the questioned donation. While it is true Sale otherwise known as Doc. No. 8; Book No. 14; Page No. that upon his death, Victor was substituted as plaintiff of the action, such 1; Series of 1951 of the Notarial file of Pompeyo B. Calleja does not alter the fact that Victor's participation in the case was in which is considered a donation, is hereby reduced representation of the interests of the original plaintiff, Leoncio. The proportionately insofar as it affected the legitime of the purpose behind the rule on substitution of parties is to ensure that the late Victor Imperial, which share is inherited by the deceased party would continue to be properly represented in the suit plaintiffs herein, to the extent that plaintiffs are ordered to through the duly appointed legal representative of the estate 10, or his heir, as in this case, for which no court appointment is required. 11 Petitioner's No renunciation of legitime may be presumed from the foregoing acts. It argument, therefore, that there is substantial identity between Leoncio and must be remembered that at the time of the substitution, the judgment private respondents, being heirs and successors-in-interest of Victor, is approving the compromise agreement has already been rendered. Victor unavailing. merely participated in the execution of the compromise judgment. He was not a party to the compromise agreement. Moreover, Leoncio's cause of action as donor of the property was fraud, purportedly employed upon him by petitioner in the execution of the More importantly, our law on succession does not countenance tacit donation. While the same circumstances of fraud and deceit are alleged in repudiation of inheritance. Rather, it requires an express act on the part of private respondents' complaint, it also raises the additional ground of the heir. Thus, under Article 1051 of Civil Code: inofficiousness of donation. The repudiation of an inheritance shall be made in a public Contrary to petitioner's contentions, inofficiousness of donation does not, or authentic instrument, or by petition presented to the and could not, form part of Leoncio's cause of action in Civil Case No. 1177. court having jurisdiction over the testamentary or intestate Inofficiousness as a cause of action may arise only upon the death of the proceedings. donor, as the value of the donation will then be contrasted with the net 12 value of the estate of the donor-deceased. Thus, when Victor substituted Leoncio in Civil Case No. 1177 upon the latter's death, his act of moving for execution of the compromise judgment Consequently, while in Civil Case No. 1177, Leoncio sought the revocation cannot be considered an act of renunciation of his legitime. He was, in full of the donation on ground of fraud, the instant case actually has two therefore, not precluded or estopped from subsequently seeking the alternative causes of action. First, for fraud and deceit, under the same reduction of the donation, under Article 772. Nor are Victor's heirs, upon circumstances as alleged in Leoncio's complaint, which seeks the his death, precluded from doing so, as their right to do so is expressly annulment in full of the donation, and which the trial court correctly recognized under Article 772, and also in Article 1053: dismissed because the compromise agreement in Civil Case No. 1177 served as a ratification and waiver on the part of Leoncio of whatever If the heir should die without having accepted or defects in voluntariness and consent may have been attendant in the repudiated the inheritance, his right shall be transmitted to making of the donation. The second cause of action is the alleged his heirs. inofficiousness of the donation, resulting in the impairment of Victor's legitime, which seeks the annulment, not of the entire donation, but only of 13 Be that as it may, we find merit in petitioner's other assignment of errors. that portion diminishing the legitime. It is on the basis of this second Having ascertained this action as one for reduction of an inofficious cause of action that private respondents prevailed in the lower courts. donation, we cannot sustain the holding of both the trial court and the Court of Appeals that the applicable prescriptive period is thirty years, Petitioner next questions the right of private respondents to contest the under Article 1141 of the Civil Code. The sense of both courts that this case donation. Petitioner sources his argument from Article 772 of the Civil is a "real action over an immovable" allots undue credence to private Code, thus: respondents' description of their complaint, as one for "Annulment of Documents, Reconveyance and Recovery of Possession of Property", which Only those who at the time of the donor's death have a suggests the action to be, in part, a real action enforced by those with right to the legitime and their heirs and successors in claim of title over the disputed land.1âwphi1.nêt interest may ask for the reduction of inofficious donations . . . . 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 As argued by petitioner, when Leoncio died on January 8, 1962, it was only Appeals 14, we declared that what is brought to collation is not the donated Victor who was entitled to question the donation. However, instead of filing property itself, but the value of the property at the time it was donated. an action to contest the donation, Victor asked to be substituted as plaintiff The rationale for this is that the donation is a real alienation which conveys in Civil Case No. 1177 and even moved for execution of the compromise ownership upon its acceptance, hence, any increase in value or any judgment therein. deterioration or loss thereof is for the account of the heir or donee. 15 What, then, is the prescriptive period for an action for reduction of an not possibly be unaware of, considering that he is a lawyer 21. Ricardo inofficious donation? The Civil Code specifies the following instances of Villalon was even a lessee of a portion of the donated property, and could reduction or revocation of donations: (1) four years, in cases of subsequent have instituted the action as sole heir of his natural son, or at the very birth, appearance, recognition or adoption of a child; 16 (2) four years, for least, raised the matter of legitime by way of counterclaim in an ejectment non-compliance with conditions of the donation; 17 and (3) at any time case 22 filed against him by petitioner in 1979. Neither does it help private during the lifetime of the donor and his relatives entitled to support, for respondents' cause that five years have elapsed since the death of Ricardo failure of the donor to reserve property for his or their support. 18 in 1981 before they filed their complaint with the RTC. Interestingly, donations as in the instant case, 19 the reduction of which hinges upon the allegation of impairment of legitime, are not controlled by Estoppel by laches is the failure or neglect for an unreasonable or a particular prescriptive period, for which reason we must resort to the unexplained length of time to do that which, by exercising due diligence, ordinary rules of prescription. could or should have been done earlier, warranting a presumption that the person has abandoned his right or declined to assert it. 23 We find the Under Article 1144 of the Civil Code, actions upon an obligation created by necessity for the application of the principle of estoppel by laches in this law must be brought within ten years from the time the right of action case, in order to avoid an injustice. accrues. Thus, the ten-year prescriptive period applies to the obligation to reduce inofficious donations, required under Article 771 of the Civil Code, A final word on collation of donations. We observe that after finding the to the extent that they impair the legitime of compulsory heirs. 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 From when shall the ten-year period be reckoned? The case of Mateo vs. area of the donated property. Hence, in its dispositive portion, it awarded a Lagua, 29 SCRA 864, which involved the reduction for inofficiousness of a portion of the property to private respondents as Victor's legitime. This was donation propter nuptias, recognized that the cause of action to enforce a upheld by the Court of Appeals. 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 Our rules of succession require that before any conclusion as to the legal legitimes may be determined. 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 It took private respondents 24 years since the death of Leoncio to initiate deducting all the payable obligations and charges from the value of the this case. The action, therefore, has long prescribed. property owned by the deceased at the time of his death; (2) the value of all donations subject to collation would be added to it. 24 As for the trial court's holding that the defense of prescription had been waived, it not being one of the issues agreed upon at pre-trial, suffice it to Thus, it is the value of the property at the time it is donated, and not the say that while the terms of the pre-trial order bind the parties as to the property itself, which is brought to collation. Consequently, even when the matters to be taken up in trial, it would be the height of injustice for us to donation is found inofficious and reduced to the extent that it impaired adhere to this technicality when the fact of prescription is manifest in the Victor's legitime, private respondents will not receive a corresponding pleadings of the parties, as well as the findings of fact of the lower courts. share in the property donated. Thus, in this case where the collatable 20 property is an immovable, what may be received is: (1) an equivalent, as much as possible, in property of the same nature, class and quality; 25 (2) if A perusal of the factual antecedents reveals that not only has prescription such is impracticable, the equivalent value of the impaired legitime in cash 26 set in, private respondents are also guilty of estoppel by laches. It may be or marketable securities; or (3) in the absence of cash or securities in the recalled that Leoncio died on January 8, 1962. Fifteen years later, Victor estate, so much of such other property as may be necessary, to be sold in 27 died, leaving as his sole heir Ricardo Villalon, who also died four years public auction. 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, We believe this worth mentioning, even as we grant the petition on the fact that he actively participated in Civil Case No. 1177 did not amount grounds of prescription and laches. 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 ACCORDINGLY, the decision of the Court of Appeals in C.A. G.R. CV No. On December 23, 1942, a majority of the members of the Board of 31976, affirming in toto the decision of the Regional Trial Court in Civil Directors composed of Francisco G. Genato, President, Simona B. Case No. 7646, is reversed and set aside. No costs.1âwphi1.nêt Vda. de Genato, Director and Secretary-Treasurer, and Florentino Genato, Vice-President and Director, held a meeting at 1075-1079 SO ORDERED. R. Hidalgo, Manila, at which Florentino Genato, was elected and designated Assistant Secretary-Treasurer of the Corporation. The Melo, Vitug, Panganiban and Purisima, JJ., concur. reason for said election and designation appears in the minutes of the meeting of the Board (Exhibit 1) which reads as follows: Republic of the Philippines SUPREME COURT MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS Manila OF THE GENATO COMMERCIAL CORPORATION Held on the 23rd day of December, 1942, at 1075-1079 R. Hidalgo, Manila EN BANC There were present at the meeting the following directors:

G.R. No. L-24983 May 20, 1968 Simona B. Vda. de Genato Francisco G. Genato FLORENTINO GENATO, FRANCISCO GENATO, and GENATO Florentino Genato COMMERCIAL CORPORATION, petitioners, vs. Absent: Carmen Genato Luz and Felisa Genato Lorenzo FELISA GENATO DE LORENZO, respondent. Mr. Francisco G. Genato presided over the meeting and Mr. Florentino Genato acted as Secretary and kept the minutes of the Crispin D. Baizas and Associates for petitioners. proceedings. Carlos, Carballo and Valdez for respondent. Doña Simona Vda. de Genato explained that due to her REYES, J.B.L., J.: advanced age it is more convenient that Florentino Genato, now Vice-President of the corporation, act as Assistant Appeal by certiorari from a judgment of the Court of Appeals in its Case Secretary-Treasurer as, as a matter of fact, he has CA-G.R. No. 28052-R, that reversed that of the Court of First Instance of heretofore been acting as such, since the work is rather Manila, ordering the cancellation of Certificates of Stock Nos. 118 and 119 strenuous. Thereupon, Doña Simona Vda. de Genato of the Genato Commercial Corporation and the issuance of another in lieu moved, seconded by the Chairman, that: thereof in the name of the Administrator of the Estate of Simona B. Vda. de Genato. RESOLVED, that Mr. Florentino Genato be elected and designated Assistant Secretary-Treasurer of the The decision under appeal states the background facts and issues to be as Corporation. follows: The above resolution was unanimously carried. The Genato Commercial Corporation is a family corporation, founded by the spouses Vicente Genato and Simona B. de Genato. At this point the chairman invited the attention of the The spouses had six children named Francisco, Florentino, Manuel, Board that it might be advisable to reward the services of Carmen, Felisa and Juan all surnamed Genato. As of March 26, Mr. Elpidio Villamiel by giving him a bonus of one share of 1928, Simona B. de Genato had 430 shares of stock, par value stock of the corporation out of the Treasury stock, P100.00 per share, represented by share certificate No. 7 signed considering that the par value thereof is only P100.00. On by Vicente Genato, President, and Simona B. de Genato, Secretary- motion duly made and seconded, it was Treasurer. RESOLVED, That the corporation gives as it does hereby Genato alleged that they had acquired the ownership of the 530 give and grant unto Mr. Elpidio Villamiel a bonus of one shares by simple donation from their mother. share of stock of the par value of P100.00 out of the Treasury stock of the corporation, for faithful services The trial court found that defendants Francisco G. Genato and rendered, hereby authorizing the officers of the corporation Florentino Genato had acquired the ownership of the 530 shares by to issue unto him the corresponding stock certificate. simple donation from their widowed mother on December 25, 1942. From the judgment dismissing the complaint, plaintiff Felisa There being no further business the meeting was Genato de Lorenzo appealed.1ªvvphi1.nêt adjourned. Appellant contends that there was no simple donation of the 530 (Sgd.) FLORENTINO GENATO shares in litigation. We find the contention meritorious in view of Secretary of the meeting the following considerations:

(Sgd.) FRANCISCO G. GENATO (1) There is no clear, satisfactory and convincing evidence Chairman of the meeting. of the alleged simple donation of the shares in litigation having a par value of P53,000.00. Florentino Genato, as a Four or five days thereafter, Florentino Genato as Assistant witness called by the plaintiffs and subsequently as a Secretary-Treasurer cancelled share certificates Nos. 7 and 18 and witness for the defendants, substantially testified that on in lieu thereof issued share certificate No. 118 for 265 shares in December 25, 1942, Juan Camus, an employee of the favor of Florentino Genato and share certificate No. 119 for 265 Corporation, came to see him at the Royal Market located shares in favor of Francisco G. Genato. on Echague Street and told him that his mother wanted to see him; that he immediately left and saw his mother at The new share certificates were not presented in evidence; they the residence at the back part of the premises of the were merely mentioned by Florentino Genato in the course of his Corporation situated on R. Hidalgo Street; that his mother testimony as a witness called by the plaintiff later on as a witness delivered to him the two (2) share certificates Nos. 7 and for the defendants. 18, already indorsed; that is, with the blank spaces of the indorsement already filled by typewriter and her signature already affixed at the bottom of the indorsement and that Simona B. Vda. de Genato having died shortly after liberation, an his mother told him "transfer them"; that two or three days intestate proceeding of her estate (Special Proc. 71546, Court of later as Assistant Secretary-Treasurer of the Corporation, First Instance, Manila) was filed. The inventory (Exhibit D), which he cancelled share certificates Nos. 7 and 18 and issued in did not include the shares in litigation, presented in the proceeding lieu thereof the new share certificates No. 118 in favor of by Francisco G. Genato as special administrator dated March 1, Florentino Genato for 265 shares and No. 119 in favor of 1946 showed that the value of the estate left by the decedent was Francisco G. Genato for 265 shares. approximately P39,806.58. The indorsement appearing on the back of share certificate On July 8, 1948, the Philippine Trust Company, judicial No. 7 (which is identical, except as to the number of administrator of the intestate estate, and the legal heirs Manuel shares, to that appearing on the back of share certificate Genato, Felisa Genato de Lorenzo and Juan Genato filed the No. 18), with the typewritten words filling the blank spaces complaint in the case at bar to recover from the other two legal indicated by underlines, reads as follows: heirs, Florentino Genato and Francisco G. Genato, the 530 shares of stock in order that they may be included in the inventory of the intestate estate of their deceased mother and in due course For value Received, I hereby sell, assign and transfer unto distributed among all the surviving children of the decedent. In Florentino Genato and Francisco G. Genato, his heirs, their answer, the defendant Florentino Genato and Francisco G. administrators and legal representatives, the Shares of the Capital stock represented by the within Certificate, and all rights, interests, participations and privileges represented shares, if the uncontested evidence of record showed that the transfer was thereby, and do hereby irrevocably constitute and appoint not supported by valid causa or consideration, which in itself is a ground Genato Commercial Corporation to transfer the said Stock for invalidating the transaction. It was so charged by the plaintiffs in the on the books of the within corporation with full power of Court of First Instance and expressly so found by the Court of Appeals. This substitution in the premises. finding being one of fact, reached after consideration of the evidence, is binding upon this Court. In addition, it is confirmed by the petitioner's own Date December 25, 1942 claim that their mother's shares in the corporation were donated to them, and not sold, as recited by the indorsement of Certificates Nos. 7 and 18 of (Sgd.) S. VDA. de GENATO the Genato Commercial Corporation. (Signature of Owner) Granting that even private transactions are to be presumed fair and Signed in the presence of regular, the presumption is only prima facie, and must yield to evidence. (Sgd.) Juan Camus By his own testimony, Florentino Genato showed that the indorsement of the shares can not be taken literally, and that it was used to disguise a different factual situation. Hence, the presumption invoked by appellants Finding that there had been neither consideration for the sale of shares nor can not apply, since they have themselves avowed the existence of a valid donation of the same, due to lack of proper acceptance and non- simulation. compliance with statutory requirements, and that the appeal of respondent Felisa Genato de Lorenzo inured to the benefit of her other co-plaintiffs, the Court of Appeals, as previously related, invalidated the transfer of the The key question, therefore, is whether there has been a valid donation as shares to Florentino and Francisco Genato, and decreed that said stock appellants claim. The Court of Appeals concluded that there was none, and remained a part of the estate of the transferor. we find no reason to overturn the opinion thus reached. Assuming, ad arguendo, that the late Simona Vda. de Genato gave the Certificates of Stock Nos. 7 and 18 to Florentino with instructions to transfer the same to For the brief of appellants, the following errors are assigned: him and his brother, this act did not constitute a valid manual donation in law for lack of proper acceptance (Civ. Code of 1889, Art. 630). 1. Respondent and respondent-appellee failed to prove by Incontestably, one of the two donees was not present at the delivery, and preponderance of evidence that there was fraud committed by there is no showing that he, Francisco Genato, had authorized his brother, petitioners in the transfer of the shares of stock in their names. Florentino to accept for both of them. As pointed out by Manresa in his Commentaries to the Civil Code of 1889 (Vol. V, 6th edition, pp. 131-132, 2. There has been no showing that the transfer made by Simona 141-142), the delivery by the donor and the acceptance by donee must be Vda. de Genato of her shares of stock to petitioners was not made simultaneous, and the acceptance by a person other than the true donee validly and regularly. must be authorized by a proper power of attorney set forth in a public document. None has been claimed to exist in this case. 3. The evidence shows that there was a simple donation made by Simona B. Vda. de Genato in favor of the herein petitioners Since by appellants' own version, the donation intended was a joint one to Florentino Genato and Francisco Genato; and both donees, one could not accept independently of his co-donee, for there is no accretion among donees unless expressly so provided (Art. 637) or 4. The judgment of the lower court became final with respect to unless they be husband and wife. the other plaintiffs who did not appeal therefrom. There being neither valid donation, nor sale, the cancellation of the original We find the appeal without merit. certificates of stock as well as the issuance of new certificates in the name of Florentino and Francisco Genato was illegal and improper for lack of With respect to the first two errors assigned, it is immaterial that the valid authority. It is a consequence of this that the shares in question are evidence did not show any fraudulent machinations on the part of deemed never to have ceased to be property of their mother, Simona B. de appellants to secure the consent of their mother to the transfer of the Genato, and must be considered still forming part of the assets of her D E C I S I O N estate. FRANCISCO, J.: It is finally contended by appellants that as appellee Felisa Genato de Lorenzo was the only one who appealed from the decision of the Court of A donation is an act of liberality whereby a person disposes gratuitously of First Instance upholding the transaction, her appeal can not inure to the a thing or right in favor of another, who accepts it.1 On the part of the benefit of the other children of Simona de Genato. donor, it is an exercise of one's generosity. However, on several occasions, instead of being accorded recognition and appreciation for this act of This contention would be plausible if the interest of each child or beneficence, the donor ends up as a victim of greed and ingratitude. This descendant had been susceptible of individual delimitation. But as the was the fate that befell Pedro Calapine (herein original plaintiff) estate of the mother is still pending liquidation, the interest of each heir constraining him to cause the revocation of the donation that he made to can not be deemed independent of that of the others. As correctly declared his niece in 1984. The instant petition for certiorari is interposed by the by the Court of Appeals, the interests of all the heirs are so interwoven as spouses Romulo and Sally Eduarte, assailing the decision of the Court of to become inseparable, and the appeal by one heir prevented the Appeals in CA-G.R. CV No. 29175 which affirmed the revocation of the appealed decision from becoming final as to the others. Hence, reversal of donation made by Pedro Calapine to his niece, Helen Doria, and at the the Court of First Instance decision as to one heir is reversal as to all of same time declared petitioners as purchasers in bad faith of the property them (Municipality of Orion vs. Concha, 50 Phil. 679).1 Actually, none of the donated. plaintiff heirs attempted to have himself declared owner of any portion of the shares in question. They could not do so, since the necessities of the As set out in the appealed decision, the undisputed facts are as follows: liquidation of their mother's estate might require the eventual disposition of all or part of the shares to strangers in order to meet obligations of the Pedro Calapine was the registered owner of a parcel of land estate. located in San Cristobal, San Pablo City, with an area of 12,199 square meters, as evidenced by Original Certificate of Title No. P- PREMISES CONSIDERED, the decision of the Court of Appeals is affirmed. 2129 (Exhibits A and 1). On April 26, 1984, he executed a deed Costs against petitioners-appellants. entitled "Pagbibigay-Pala (Donacion InterVivos)" ceding one-half portion thereof to his niece Helen S. Doria (Exhibit B). Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Angeles, JJ., concur. On July 26, 1984, another deed identically entitled was purportedly Fernando, J., is on leave. 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), Republic of the Philippines on the basis of which said original certificate was cancelled and in SUPREME COURT lieu thereof Transfer Certificate of Title No. T-23205 was issued in Manila her name, (Exhibits G and 2).

THIRD DIVISION 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 G.R. No. 105944 February 9, 1996 the Calauan Christian Reformed Church, Inc. (Exhibit H), on the basis of which said transfer certificate of title was cancelled and SPOUSES ROMULO AND SALLY EDUARTE, petitioners, TCT No. T-24444 was issued in its name covering 157 square vs. meters (Exhibit 2-A) and TCT No. T-24445, in the name of Helen S. THE HONORABLE COURT OF APPEALS and PEDRO CALAPINE Doria covering the remaining portion of 12,042 square meters (substituted by ALEXANDER CALAPINE and ARTEMIS CALAPINE), (Exhibit 3). respondents. On March 25, 1988, Helen S. Doria sold, transferred and conveyed After trial, the Regional Trial Court, Fourth Judicial Region, Branch unto the spouses Romulo and Sally Eduarte the parcel of land 30, San Pablo City rendered judgment, the dispositive part of which covered by TCT No. T-24445, save the portion of 700 square provides: 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 WHEREFORE, premises considered, judgment is hereby lieu thereof TCT No. T-27434, issued in the name of the vendees rendered by the Court in the instant case in favor of (Exhibit 4). plaintiff and against defendant Eduartes to wit:

Claiming that his signature to the deed of donation (Exhibits C and 1. DECLARING as it is hereby declared, the revocation of D) was a forgery and that she was unworthy of his liberality, Pedro the Deed of Donation dated April 26, 1984; Calapine brought suit against Helen S. Doria, the Calauan Christian Reformed Church, Inc. and the Spouses Romulo and Sally Eduarte 2. ANNULLING, voiding, setting aside and declaring of no to revoke the donation made in favor of Helen S. Doria (Exhibit B), force and effect the Deed of Donation dated July 26, 1984, to declare null and void the deeds of donation and sale that she the deed of absolute sale executed on March 25, 1988 by had executed in favor of the Calauan Christian Reformed Church, and between spouses Eduartes and Helen Doria, and the Inc. and the spouses Romulo and Sally Eduarte (Exhibits H, I and 3- Transfer Certificate of Title No. T-27434 issued under the F) and to cancel TCT Nos. T-24444, 24445 and T-27434. name of spouses Romulo and Sally Eduarte;

Answering the complaint, the defendants spouses denied 3. ORDERING the office of the Register of Deeds, San Pablo knowledge of the first deed of donation and alleged that after a City, to cancel TCT No. T-27434 or any other adverse title part of the property was donated to the defendant Calauan emanating from OCT No. P-2129 and in lieu thereof, to Christian Reformed Church, Inc., the remaining portion thereof was issue a new transfer certificate of title covering the subject sold to them by the defendant Helen S. Doria; and that the property under the names of the substitute-plaintiffs plaintiff's purported signature in the second deed of donation was Alexander and Artemis both surnamed Calapine, after his own, hence genuine. They prayed that the complaint against payment of the corresponding fees and taxes therefor; and 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 4. ORDERING defendant Helen Doria to pay substitute- be ordered to reimburse them the purchase price of P110,000 and plaintiffs the sum of P20,000.00 as and for attorney's fees. to pay them moral and exemplary damages and attorney's fees (pp. 23-31, rec.). Judgment on the cross-claim of defendant Eduartes against Helen Doria is further rendered by ordering the latter to The defendant Calauan Christian Reformed Church, Inc. manifested pay the former the sum of P110,000.00 with legal interest in its answer the willingness to reconvey to the plaintiff that part of thereon starting from March 25, 1988 until full payment, the property donated to it by Helen S. Doria (pp. 36-38, rec.). And and the further sum of P20,000.00 as and for attorney's having executed the corresponding deed of reconveyance, the fees. case as against it was dismissed (pp. 81-83; 84, rec.). The counterclaim of defendant Eduartes against plaintiff is The defendants Helen S. Doria and the City Assessor and the hereby dismissed for lack of merit. Registrar of Deeds of San Pablo City did not file answers to the plaintiffs complaint. Costs against defendant Helen Doria in both the complaint and the cross-claim (pp. 11-12, decision, pp. 264-265, After the plaintiffs death on August 27, 1989, on motion he was rec.). substituted by his nephews Alexander and Artemis Calapine upon order of the Court (pp. 147-152; 250, rec.) Only the defendants Eduarte spouses took an appeal (p. 266, rec.), Petitioners are now before us taking exception to the foregoing findings of claiming that the trial court erred - respondent Court of Appeals and contending that the same are not in accord with the law and evidence on record. 1. In annulling, voiding, setting aside, and declaring of no force and effect - 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 (a) the deed of donation (Exhibit C and 1-A), dated because the acts of ingratitude referred to therein pertain to offenses July 26, 1984; committed by the donee against the person or property of the donor. Petitioners argue that as the offense imputed to herein donee Helen Doria - (b) the deed of absolute sale (Exhibit 1 and 3-E) falsification of a public document - is neither a crime against the person executed on March 25, 1988 by and between nor property of the donor but is a crime against public interest under the Spouses Eduartes and Helen Doria; Revised Penal Code, the same is not a ground for revocation.

(c) TCT No. T-27434 (Exhibit 4) issued in the name In support of this contention, petitioners cite the following portions found in of spouses Romulo Eduarte and Sally Eduarte; and Tolentino's Commentaries and Jurisprudence on the Civil Code:

in revoking the deed of donation (Exhibit B) dated April 26, 1984; 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 2. In declaring the appellants Eduartes buyers in bad faith; honor include offenses against chastity and those against the property, include robbery, theft, usurpation, swindling, arson, 3. In not finding the plaintiffs guilty of estoppel by silence and/or damages, etc. (5 Manresa 175-176).4 guilty of suppression of evidence instead of finding the appellants Eduartes guilty of suppression of evidence; and This assertion, however, deserves scant consideration. The full text of the very same commentary cited by petitioners belies their claim that 4. In finding that the signature of Pedro Calapine in the deed of falsification of the deed of donation is not an act of ingratitude, to wit: donation (Exhibits C and 1-A) dated July 26, 1984 a forgery based on the opposite findings of the handwriting experts presented by Offense Against Donor. - All crimes which offend the donor show each party and in the absence of the testimony of Pedro Calapine 2 ingratitude and are causes for revocation. There is no doubt, who was then still alive. (pp. 1-2, appellants' brief.) therefore, that the donee who commits adultery with the wife of the donor, gives cause for revocation by reason of ingratitude. The In its decision dated April 22, 1992,3 respondent Court of Appeals crimes against the person of the donor would include not only dismissed petitioners' appeal and affirmed the decision of the trial court. homicide and physical injuries, but also illegal detention, threats, Respondent court was in complete accord with the trial court in giving and coercion; those against honor include offenses against more credence to the testimony of private respondents' expert witness, chastity; and those against the property, include robbery, theft, NBI document examiner Bienvenido Albacea, who found Pedro Calapine's usurpation, swindling, arson, damages, etc. [Manresa 175-176].5 signature in the second deed of donation to be a forgery. It also ruled that (Emphasis supplied). 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 Obviously, the first sentence was deleted by petitioners because it totally her favor in accordance with Article 765 of the Civil Code. Furthermore, controverts their contention. As noted in the aforecited opinion "all crimes respondent court upheld the trial court's finding that petitioners are not which offend the donor show ingratitude and are causes for revocation." buyers in good faith of the donated property as they failed to exercise due Petitioners' attempt to categorize the offenses according to their diligence in verifying the true ownership of the property despite the classification under the Revised Penal Code is therefore unwarranted existence of circumstances that should have aroused their suspicions. 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 was admitted that they omitted or overlooked the examination of Penal Code.6 at least three (3) standard specimen signatures of Pedro Calapine which were previously subject of the NBI examination marked as Petitioners also impute grave error to respondent Court of Appeals in Exhibits "S-9", "S-10" and "S-11". When questioned regarding this finding that "the second deed of donation dated July 26, 1984 was falsified. oversight, Cruz testified that in his opinion, the inclusion or non- Petitioners deplore the fact that more credence was given to the testimony inclusion of said exhibits in their examination will not affect the of the NBI handwriting expert who found Pedro Calapine's signature in the same and they would have arrived at the same conclusion anyway. second deed of donation to be a forgery despite the existence of Again, when asked why they did not bother to have the original controverting testimony by PC-INP Crime Laboratory (PCCL) Chief copies of the documents being questioned (Exhs. "Q-1" through "Q- Document Examiner which petitioners adduced as evidence on their part. 3") for their examination, Cruz replied that they are using a special film so it will not matter whether the documents being examined We are not persuaded. Respondent Court of Appeals and the trial court are the original or a mere photocopy (TSN 8, 10, 12 and 26, cannot be faulted for giving more weight and credence to the testimony of Hearing of Nov. 23, 1989). the NBI handwriting expert considering that the examination of the said witness proved to be complete, thorough and scientific. 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 In gauging the relative weight to be given to the opinion of handwriting cavalier attitude of Cruz. In fine, between the examinations made experts, we adhere to the following standards: by the two witnesses, that of Albacea's proved to be complete, thorough and scientific and is worthy of credence and belief.8 We have held that the value of the opinion of a handwriting expert depends not upon his mere statements of whether a writing is The afore-quoted findings confirm beyond doubt the failure of petitioners' genuine or false, but upon the assistance he may afford in pointing expert witness to satisfy the above-mentioned criteria for evaluating the out distinguishing marks, characteristics and discrepancies in and opinion of handwriting experts. At the same time, petitioners' witness between genuine and false specimens of writing which would failed to rebut the convincing testimony of the NBI handwriting expert ordinarily escape notice or detection from an unpracticed observer. presented by private respondents. We therefore find no reason to deviate The test of genuineness ought to be the resemblance, not the from the assailed conclusions as the same are amply supported by the formation of letters in some other specimens but to the general evidence on record. character of writing, which is impressed on it as the involuntary and unconscious result of constitution, habit or other permanent Finally, proceeding to the crucial issue that directly affects herein course, and is, therefore itself permanent. 7 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 Confronted with contradicting testimonies from two handwriting experts, the deed of sale executed between petitioners and donee Helen Doria. the trial court and respondent Court of Appeals were convinced by the opinion of the NBI handwriting expert as it was more exhaustive, in In adjudging petitioners as buyers in bad faith, respondent Court of contrast with the testimony of petitioners' witness from the PCCL which Appeals affirmed the trial court's finding that the attendant circumstances, was discarded on account of the following flaws: 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 Court is not convinced with Cruz's explanations. Apart from the the suspicion of petitioners and impelled them to exercise due diligence in visual inconsistencies, i.e., the strokes with which some letters verifying the true ownership of the property being sold. Petitioners dispute were made, the variety in the sizes of the letters, the depth, the the lower court's conclusion and argue that although there were other difference in the slant which the Court itself observed in its own occupants in the subject property, no adverse claim was made by the examination of both the questioned signatures and those standard latter as they were mere tenants therein, thus, petitioners were not obliged specimen signatures, there is evidence showing that Cruz did not to make any further inquiry because the property being sold was covered make a thorough examination of all the signatures involved in this by a certificate of title under Helen Doria's name. particular issue. Thus even in the report submitted by the PCCL it We agree with petitioners. The rule is well-settled that mere possession In this regard, it has been held that the proper recourse of the true owner cannot defeat the title of a holder of a registered torrens title to real of the property who was prejudiced and fraudulently dispossessed of the property.9 Moreover, reliance on the doctrine that a forged deed can same is to bring an action for damages against those who caused or legally be the root of a valid title is squarely in point in this case: 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 13 Although generally a forged or fraudulent deed is a nullity and the Assurance Fund. conveys no title, however there are instances when such a fraudulent document may become the root of a valid title. One Conformably with the foregoing, having established beyond doubt that such instance is where the certificate of title was already Helen Doria fraudulently secured her title over the disputed property which transferred from the name of the true owner to the forger, and she subsequently sold to petitioners, Helen Doria should instead be while it remained that way, the land was subsequently sold to an adjudged liable to private respondents, and not to petitioners as declared innocent purchaser. For then, the vendee had the right to rely upon by the trial court and respondent Court of Appeals, for the resulting what appeared in the certificate. damages to the true owner and original plaintiff, Pedro Calapine.

Where there was nothing in the certificate of title to indicate any ACCORDINGLY, the petition is GRANTED and the appealed decision is cloud or vice in the ownership of the property, or any encumbrance hereby MODIFIED. The portions of the decision of the Regional Trial Court thereon, the purchaser is not required to explore further than what of San Pablo City, Branch 30, as affirmed by the Court of Appeals in CA- the Torrens Title upon its face indicates in quest for any hidden G.R. CV No. 29175 which ordered the following: defect or inchoate right that may subsequently defeat his right thereto. If the rule were otherwise, the efficacy and conclusiveness xxx xxx xxx of the certificate of title which the Torrens System seeks to insure 10 would entirely be futile and nugatory. 2. ANNULLING, voiding, setting aside and declaring of no force and effect . . . , the deed of absolute sale executed on March 25, 1988 When herein petitioners purchased the subject property from Helen Doria, by and between spouses Eduartes and Helen Doria, and the the same was already covered by TCT No. T-23205 under the latter's Transfer Certificate of Title No T-27434 issued under the name of name. And although Helen Doria's title was fraudulently secured, such fact spouses Romulo and Sally Eduarte; cannot prejudice the rights of herein petitioners absent any showing that they had any knowledge or participation in such irregularity. Thus, they 3. ORDERING the office of the Register of Deeds, San Pablo City, to cannot be obliged to look beyond the certificate of title which appeared to cancel TCT No. T-27434 or any other adverse title emanating from be valid on its fade and sans any annotation or notice of private OCT No. P-2129 and in lieu thereof, to issue a new transfer respondents' adverse claim. Contrary therefore to the conclusion of certificate of title covering the subject property under the names of respondent Court, petitioners are purchasers in good faith and for value as the substitute-plaintiff Alexander and Artemis both surnamed they bought the disputed property without notice that some other person Calapine, after payment of the corresponding fees and taxes has a right or interest in such property, and paid a full price for the same at therefor; and the time of the purchase or before they had notice of the claim or interest of some other person in the property.11 xxx xxx xxx Respondent Court therefore committed a reversible error when it affirmed the ruling of the trial court annulling and setting aside the deed of absolute Judgment on the cross-claim of defendant Eduartes against Helen sale dated March 25, 1988 between petitioners and Helen Doria, as well as Doria is further rendered by ordering the latter to pay the former the Transfer Certificate of Title No. T-27434 issued under petitioners' the sum of P110,000.00 with legal interest thereon starting from name, the established rule being that the rights of an innocent purchaser March 25, 1988 until full payment, . . . . for value must be respected and protected notwithstanding the fraud employed by the seller in securing his title.12 are hereby REVERSED and SET ASIDE. Instead, Helen Doria is hereby ordered to pay herein private respondents called the DONEES, have agreed as they do hereby agree to the the sum of P110,000.00 with legal interest counted from March 25, 1988 following; until full payment, as damages for the resulting loss to original plaintiff Pedro Calapine. That the said DONORS, Dionisio Nagrampa and Tecla Collada, for and in consideration of their love and affection for the said In all other respects, the appealed decision is hereby affirmed. DONEES, Julia Margate Nagrampa and Pablo Sadang, and also for the services rendered and to be rendered to the DONORS by the SO ORDERED. donees, do by these presents, voluntarily give, grant, and donate to the DONEES, their heirs, executors, administrators, and assigns Narvasa, C.J., Davide, Jr., Melo and Panganiban, JJ., concur. forever the following described real properties and the improvements thereon, free from all liens, charges and incumbrances: . . . Republic of the Philippines SUPREME COURT Manila These parcels described above are not registered under Act 496 not under the Spanish Mortgage Law, hence, the parties herein have agreed to register this instrument under the terms of Act EN BANC 3344.

G.R. No. L-15434 October 31, 1960 That the said donees, Julia Margate Nagrampa and Pablo Sadang, hereby receive and accept this donation and gift and further DIONISIO NAGRAMPA, ET AL., plaintiffs-appellants, express their gratitude for the generosity of the said DONORS who vs. hereby acknowledge the notification of such acceptance by the JULIA MARGATE NAGRAMPA, defendant-appellee. Donees. . . . .

Ricardo B. Caayao for appellants. Donors and donees signed and acknowledged the instrument. Gregorio S. Turiano for appellee. On July 21, 1958, this complaint was filed, the plaintiffs alleging that BENGZON, J.: defendant, in violation of the conditions of the donation, had failed to render them "financial, physical and all kinds of services"; and that "five This is a suit to revoke a donation. The court of first instance of Camarines years ago" plaintiffs demanded such services, which defendant Julia Sur dismissed it on the ground of prescription. Margate Nagrampa (her husband had died) "refused and until now refuses" to render. Copy of the deed of donation was attached to the complaint. Way back in 1937, the plaintiffs executed a notarial instrument entitled "Onerous donation inter vivos" the pertinent portions of which read as Defendant moved to dismiss, because Art. 764 of the Civil Code of the follows: Philippines has fixed a four-year period within which actions to revoke donations may be filed, such period to be counted from the non- That we, Dionisio Nagrampa, Filipino, 69 years of age, and Tecla compliance with the conditions allegedly violated. The court sustained the Collada, Filipino, 68 years old, husband and wife, respectively, motion, and ordered the dismissal of the case. residents and with postal address in Iriga, Camarines Sur, Philippines, hereafter called the DONORS, and Julia Margate Plaintiffs have appealed. The period of prescription, they contend, is ten Nagrampa, Filipino, of legal age, and Pablo Sadang, Filipino, of years because this being an onerous donation, it is governed by the law on legal age, wife and husband respectively, all residenta and with contracts — Art. 733, Civil Code of the Philippines-and according to Art. postal address in Iriga, Camarines Sur, Philippines, hereinafter 1144 of the same Code, actions upon written contracts must be brought within ten years from the time the right of action accrues. Appellee replies that Art. 764 is a special provision about revocation that Republic of the Philippines must control general provisions. At any rate, she says, even if the rules of SUPREME COURT contracts be applied, plaintiffs' action is in effect one for rescission. which Manila actin "must be commenced within four years." (Art. 1389.) FIRST DIVISION The deed of donation was undoubtedly inter vivos. It was captioned "onerous donation inter vivos." It contemplated immediate transfer of G.R. No. L-58671 November 22, 1985 ownership. There was no mention of death, the donees "hereby received" the donation, and it provided for registration of the instrument (which EDUVIGIS J. CRUZ, petitioner, donated real property) in the land records. It was not in the form of a will, 1 vs. since there were no three witnesses and no attestation clause. COURT OF APPEALS, ET AL., respondents.

Such donations (inter vivos) "shall be governed by the general provisions concerning contracts and obligations in all matters not determined by this title." Art. 621, Civil Code (Art. 732, Civil Code of the Philippines). And under Art. 647 of the same title (as amended by Art. 764 of the Civil Code PLANA, J.: of the Philippines), actions for the revocation of such donation by reason of non-compliance with its conditions prescribe "after four years counted from This a petition for review of the decision of the defunct Court of Appeals such non-compliance." Now, therefore, as the complaint described refusal dated August 20, 1981 in CA-G.R. No. 65338-H reversing that of the Court of donees to render services — which refusal constituted the alleged non- of First Instance of Rizal. and dismissing petitioner's complaint for compliance — more than five years before the presentation thereof, it is revocation of donation against herein private respondents Teresita, Lydia clear that the court a quo committed no error in dismissing it on the and all surnamed De Leon. ground of prescription.2 In Eduvigis J. Cruz, a childless widow, donated a 235.5 sq.m residential lot In this connection, it may be explained that although no special period of in San Isidro, Taytay Rizal together with the two-door apartment erected prescription was fixed in "this title" at the time of the donation in 1937, the thereon to her grandnieces private respondents herein, in a deed of provisions of Art. 764 of the Civil Code of the Philippines operate, to donation entitled "Kasulatan Sa Kaloobpala". The property was accordingly preclude this action, because the entire period of four years fixed by its transferred to the names of private respondents. has elapsed since the time such Code took effect in 1950: suit in July, 1958, violation in 1953. In 1974, Eduvigis Cruz judicially adopted Cresencia Ocreto, a minor, after which she extrajudicially tried to revoke the donation, but the donees Art. 1116. — Prescription already running before the effectivity of resisted, alleging that— this Code shall be governed by laws previously in force; but if since the time this Code took effect the entire period herein required for (a) the property in question was co-owned by Eduvigis Cruz prescription should elapse. the present Code shall be applicable, and her brother. the late Maximo Cruz, grandfather of the even though by the former laws a longer period might be required. donees, hence the latter own 1/2 of the property by (1939) inheritance; and

Consequently, the appealed order is hereby affirmed, with costs against (b) Eduvigis Cruz owns another property, an agricultural appellants. land of more than two hectares situated in Barrio Dolores, Taytay, Rizal, hence the donation did not impair the Paras, C. J., Padilla, Bautista Angelo, Labrador, Reyes, J. B. L., Barrera, presumptive legitime of the adopted child. Gutierrez David, and Paredes, JJ., concur. In 1975, petitioner filed a complaint against the donees for revocation of (d) In an action for revocation of donation, the donor has the burden to donation in the Court of First Instance of Rizal (Civil Case No. 21049) show that the donation has impaired the legitime of the subsequent child; invoking Article 760, paragraph 3 of the New Civil Code, which reads: but in this case, Eduvigis did not even allege it in her complaint.

Art. 760, Ever donation inter vivos made by a person having no children or In the instant petition for review, petitioner imputes to the appellate court descendants, legitimate or legitimated by subsequent marriage, or alleged errors which boil down to the question as to whether under the illegitimate, may be revoked or reduced as provided in the next article, by facts as established and the law, the decision under review correctly the happening of any of these events: dismissed the complaint to annul the subject donation. We hold that it did.

xxx xxx xxx 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 (3) If the donor should subsequently adopt a minor child. 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, After trial, the trial court rendered a decision revoking the donation. It did taking into account the whole estate of the donor at the time of the not find merit in defendants' claim that the lot, by donor and her deceased adoption of the child. (Civil Code, Articles 760, 761 and 763). Of course, brother, Maximo Cruz, because the donor's ownership was deemed the burden of proof is on the plaintiff-donor, who must allege and establish admitted by the donees by accepting the deed of donation. It also rejected the requirements prescribed by law, on the basis of which annulment or defendants' argument that the donation did not impair the legitime, saying reduction of the donation can be adjudged. that claim was "beside the point" and did not limit plaintiff's right under Art. 760 of the Civil Code. Unfortunately, in the case at bar, the complaint for annulment does not allege that the subject donation impairs the legitime of the adopted child. On appeal, the Court of Appeals reversed the trial court and dismissed the Indeed it contains no indication at all of the total assets of the donor. complaint. It found that.— Nor is there proof of impairment of legitime. On the contrary, there is a) the trial court took into consideration only Article 760 of the Civil Code unrebutted evidence that the donor has another piece of land (27,342 sq. and ignored Article 761 which states: " In the cases referred to in the m.) situated in Dolores, Taytay, Rizal worth P273,420.00 in 1977, although preceding article, the donation shall be revoked or reduced insofar as it then subject to litigation. 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 The legal situation of petitioner-donor, as plaintiff, is made worse by the whole estate of the donor at the time of the birth, appearance or adoption factual finding of the Court of Appeals that the grandfather of the donees of a child. 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 (b) Eduvigis Cruz owns another lot in Dolores Taytay Rizal, although the taken from the portion of the estate within the free disposal of petitioner. subject of a pending litigation valued at P273,420.00 in 1977. WHEREFORE, the decision under review is affirmed. (c) The donated lot did not belong entirely to Eduvigis as ½ thereof belonged to her brother Maximo Cruz, grandfather of defendants. 1974 it SO ORDERED. 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 Teehankee (Chairman), Gutierrez, Jr., De la Fuente and Patajo, JJ., concur. 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. Republic of the Philippines SUPREME COURT Manila EN BANC Tarlac, which donation was accepted by the latter, the title to the property was transferred to the municipality of Tarlac. It is true that the donation G.R. No. L-24190 July 13, 1926 might have been revoked for the causes, if any, provided by the law, but the fact is that it was not revoked when Concepcion Cirer and James Hill GEORGE L. PARKS, plaintiff-appellant, made the sale of this parcel to the plaintiff. Even supposing that causes vs. existed for the revocation of this donation, still, it was necessary, in order PROVINCE OF TARLAC, MUNICIPALITY OF TARLAC, CONCEPCION to consider it revoked, either that the revocation had been consented to by CIRER, and JAMES HILL, her husband, defendants-appellees. the donee, the municipality of Tarlac, or that it had been judicially decreed. None of these circumstances existed when Concepcion Cirer and James Hill sold this parcel to the plaintiff. Consequently, when the sale was made Jos. N. Wolfson for appellant. Concepcion Cirer and James Hill were no longer the owners of this parcel Provincial Fiscal Lopez de Jesus for the Province and Municipality of Tarlac. and could not have sold it to the plaintiff, nor could the latter have No appearance for the other appellees. acquired it from them.

AVANCEÑA, C. J.: But the appellant contends that a condition precedent having been imposed in the donation and the same not having been complied with, the On October 18, 1910, Concepcion Cirer and James Hill, the owners of donation never became effective. We find no merit in this contention. The parcel of land No. 2 referred to in the complaint, donated it perpetually to appellant refers to the condition imposed that one of the parcels donated the municipality of Tarlac, Province of Tarlac, under certain conditions was to be used absolutely and exclusively for the erection of a central specified in the public document in which they made this donation. The school and the other for a public park, the work to commence in both cases donation was accepted by Mr. Santiago de Jesus in the same document on within the period of six months from the date of the ratification by the behalf of the municipal council of Tarlac of which he was the municipal partes of the document evidencing the donation. It is true that this president. The parcel thus donated was later registered in the name of the condition has not been complied with. The allegation, however, that it is a donee, the municipality of Tarlac. On January 15, 1921, Concepcion Cirer condition precedent is erroneous. The characteristic of a condition and James Hill sold this parcel to the herein plaintiff George L. Parks. On precedent is that the acquisition of the right is not effected while said August 24, 1923, the municipality of Tarlac transferred the parcel to the condition is not complied with or is not deemed complied with. Meanwhile Province of Tarlac which, by reason of this transfer, applied for and nothing is acquired and there is only an expectancy of right. Consequently, obtained the registration thereof in its name, the corresponding certificate when a condition is imposed, the compliance of which cannot be effected of title having been issued to it. except when the right is deemed acquired, such condition cannot be a condition precedent. In the present case the condition that a public school The plaintiff, George L. Parks, alleging that the conditions of the donation be erected and a public park made of the donated land, work on the same had not been complied with and invoking the sale of this parcel of land to commence within six months from the date of the ratification of the made by Concepcion Cirer and James Hill in his favor, brought this action donation by the parties, could not be complied with except after giving against the Province of Tarlac, the municipality of Tarlac, Concepcion Cirer effect to the donation. The donee could not do any work on the donated and James Hill and prayed that he be declared the absolute owner entitled land if the donation had not really been effected, because it would be an to the possession of this parcel, that the transfer of the same by the invasion of another's title, for the land would have continued to belong to municipality of Tarlac to the Province of Tarlac be annulled, and the the donor so long as the condition imposed was not complied with. transfer certificate issued to the Province of Tarlac cancelled. The appellant also contends that, in any event, the condition not having The lower court dismissed the complaint. been complied with, even supposing that it was not a condition precedent but subsequent, the non-compliance thereof is sufficient cause for the The plaintiff has no right of action. If he has any, it is only by virtue of the revocation of the donation. This is correct. But the period for bringing an sale of this parcel made by Concepcion Cirer and James Hill in his favor on action for the revocation of the donation has prescribed. That this action is January 15, 1921, but that sale cannot have any effect. This parcel having prescriptible, there is no doubt. There is no legal provision which excludes been donated by Concepcion Cirer and James Hill to the municipality of 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 SIR: In reply to your courteous communication of even date, I have donation, providing a special period of five years for the revocation by the the honor to state that I am willing to convey the land belonging to subsequent birth of children (art. 646, Civil Code), and one year for the me in front of the Malacañang Palace, corner of San Rafael and revocation by reason of ingratitude. If no special period is provided for the Aviles streets, district of San Miguel, not as a sale but as a gift, prescription of the action for revocation for noncompliance of the thus contributing with great pleasure to the beautifying of that conditions of the donation (art. 647, Civil Code), it is because in this neighborhood, but I make this donation on condition that no respect the donation is considered onerous and is governed by the law of structures shall be erected upon the land and that it will not be contracts and the general rules of prescription. Under the law in force (sec. devoted to any purpose other than the beautifying of the vicinity, 43, Code of Civ. Proc.) the period of prescription of this class of action is and for this purpose the city should acquire such of the adjoining ten years. The action for the revocation of the donation for this cause land as may be necessary to form with mine a public square with arose on April 19, 1911, that is six months after the ratification of the gardens and walks. instrument of donation of October 18, 1910. The complaint in this action was presented July 5, 1924, more than ten years after this cause accrued. If my offer is accepted subject to the conditions above stated, I will turn over my title deeds to the said land that the municipal By virtue of the foregoing, the judgment appealed from is affirmed, with architect may survey it and the same be conveyed to the the costs against the appellant. So ordered. corporation over which you so fittingly preside.

Street, Villamor, Ostrand, Johns, Romualdez and Villa-Real, JJ., concur. (Signed) E. M. BARRETTO.

Republic of the Philippines In its session of the 17th of June the Ayuntamiento passed an act reading SUPREME COURT as follows: Manila Report having been made upon the purpose instituted for the EN BANC purpose of beautifying and improving the grounds near the Malacañang Palace, the residence of the highest authority in these G.R. No. 3148 February 6, 1907 Islands, together with a letter from Enrique M. Barretto, wherein he offers to donate a certain tract of land belonging to him in front of ENRIQUE MA. BARRETTO, plaintiff-appellee, the said palace on condition that it shall be devoted to the purpose vs. indicated in his letter, and states that in case any buildings, be THE CITY OF MANILA, defendant-appellant. erected upon the said land he will reclaim the ownership of the same, the municipal council being duly informed of the said proceedings, and after discussing the matter, resolved do Modesto Reyes for appellant. gratefully thank Mr. Barretto for his disinterested offer of this land Antonio V. Herrero for appellee. and to request him to forward the title deeds so that the municipal architect may order that with the same documents the necessary TRACEY, J.: deed of conveyance may be executed. It is further resolved that the said architect be required to submit the necessary plans and On June 16, 1885, in reply to an inquiry from the corregidor of the city of specifications to carry out the improvements in question. Manila as to whether he would sell his plat of ground facing the Malacañang Palace, in order to assist in the improvement of the locality, In consequence whereof on the 19th of the same month the corregimiento the plaintiff wrote the following letter: forwarded to the plaintiff the following communication:

MANILA, June 16, 1885. MANILA, June 19, 1885.

To his excellency the CORREGIDOR OF THE CITY OF MANILA. At a regular session of the municipal council held on the 17th inst., It is contended by the city that its resolution and letter of acceptance, the same was duly informed of your letter wherein you offer to omitting any express mention of this part of the condition, worked an donate the tract of land belonging to you in front of the evasion of it, and that the subsequent delivery of the plaintiff's title deeds Malacañang Palace for the purpose of beautifying the must be taken as an acceptance of the terms specified by the city in its neighborhood, on condition that it shall not be devoted to any letter, without reference to the plaintiff's first offer. To this view we can not other purpose. The municipal council resolved to gratefully thank accede. The whole negotiation must be taken into consideration in order to you for your offer to donate the land in question, which will determine what was in the minds of the parties at the time. The plaintiff's contribute to the realization of the improvement contemplated, proposition was unmistakable. If the city designed to reject any part of it and for which the municipality is indebted to you. At the same time while accepting the rest, such rejection should have been in express terms. I have the honor to request that you forward to this office the title Not only do we fail to find any such rejection, but in the letter of June 19 deeds to your said land so that the architect may survey the same there appears to be in its concluding words an express recognition of the and make a sketch of it in order that the necessary deed of terms imposed, when it is provided that the deed of cession shall be drawn conveyance may be executed with the restrictions indicated by "with the restrictions indicated by you." This is a reference to the you. restrictions in the letter of the plaintiff and operates of necessity as an acceptance of them. (Signed) JUSTO MARTIN LUNA. TO ENRIQUE M. BARRETTO. The contract having fixed no period in which the condition should be fulfilled, the provisions of article 1128 of the Civil Code are applicable and The plaintiff thereafter sent to the Ayuntamiento his title deeds, and until it is the duty of the court to fix a suitable time for its fulfillment. (Eleizegui the month of February, 1903, appears to have had the idea that a formal vs. Manila Lawn Tennis Club, 2 Phil. Rep., 309.) transfer of the plot had been executed by him; in fact, it had not been. The city, however, entered into possession of the land, building a railing Thereafter if the city desires to retain the property it must proceed to separating it from the adjoining property, and ever since that time the acquire so much land as shall satisfy the requirement of the donation. ground has been used as part of the public street, increasing the width thereof opposite the exit from the Palace and substantially improving the With the other condition expressed in the plaintiff's letter, that no building appearance of the locality. The plaintiff now brings this action to recover should be erected on the property, we think the city has sufficiently possession of the land on account of the failure of the city to comply with complied. the conditions of the donation. The judgment of the Court of First Instance awarding the plaintiff Although a formal conveyance of the property appears to have never been possession of the property is reversed, and the cause is remanded to the made, yet the taking possession of the land by the city upon the terms Court of First Instance for determination of the time within which the contained in the offer and acceptance give effect to the latter. The contiguous property must be acquired by the city in order to comply with conditions expressed in the offer of the plaintiff were two: the condition of the donation. So ordered.

First. That no building should be erected upon the ground; and Arellano, C.J., Torres, Mapa, Carson and Willard, JJ., concur.

Second. That it should be devoted to purposes of adornment; to which end, Republic of the Philippines however, the Ayuntamiento was required to acquire enough of the SUPREME COURT contiguous lots to form in all a great public plaza with gardens and paths. Manila

This last requirement is so specific and concrete that it must have formed FIRST DIVISION and an essential part of the conditions in the mind of the donor and must have also attracted the attention of the donee. It has never been complied with. G.R. No. 112127 July 17, 1995 was filed the latter had not complied with the conditions of the donation. Private respondents also argued that petitioner had in fact negotiated with CENTRAL PHILIPPINE UNIVERSITY, petitioner, the National Housing Authority (NHA) to exchange the donated property vs. with another land owned by the latter. COURT OF APPEALS, REMEDIOS FRANCO, FRANCISCO N. LOPEZ, CECILIA P. VDA. DE LOPEZ, REDAN LOPEZ AND REMARENE LOPEZ, In its answer petitioner alleged that the right of private respondents to file respondents. 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. BELLOSILLO, J.: On 31 May 1991, the trial court held that petitioner failed to comply with CENTRAL PHILIPPINE UNIVERSITY filed this petition for review on certiorari the conditions of the donation and declared it null and void. The court a of the decision of the Court of Appeals which reversed that of the Regional quo further directed petitioner to execute a deed of the reconveyance of Trial Court of Iloilo City directing petitioner to reconvey to private the property in favor of the heirs of the donor, namely, private respondents respondents the property donated to it by their predecessor-in-interest. herein.

Sometime in 1939, the late Don Ramon Lopez, Sr., who was then a Petitioner appealed to the Court of Appeals which on 18 June 1993 ruled member of the Board of Trustees of the Central Philippine College (now that the annotations at the back of petitioner's certificate of title were Central Philippine University [CPU]), executed a deed of donation in favor resolutory conditions breach of which should terminate the rights of the of the latter of a parcel of land identified as Lot No. 3174-B-1 of the donee thus making the donation revocable. 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 The appellate court also found that while the first condition mandated donee CPU with the following annotations copied from the deed of petitioner to utilize the donated property for the establishment of a donation — 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 1. The land described shall be utilized by the CPU condition, petitioner could not be considered as having failed to comply exclusively for the establishment and use of a medical with its part of the bargain. Thus, the appellate court rendered its decision college with all its buildings as part of the curriculum; 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. 2. The said college shall not sell, transfer or convey to any third party nor in any way encumber said land; 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 3. The said land shall be called "RAMON LOPEZ CAMPUS", obligations and resolutory conditions of the donation which must be and the said college shall be under obligation to erect a fulfilled non-compliance of which would render the donation revocable; (b) cornerstone bearing that name. Any net income from the in holding that the issue of prescription does not deserve "disquisition;" land or any of its parks shall be put in a fund to be known and, (c) in remanding the case to the trial court for the fixing of the period as the "RAMON LOPEZ CAMPUS FUND" to be used for within which petitioner would establish a medical college. 2 improvements of said campus and erection of a building thereon. 1 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 On 31 May 1989, private respondents, who are the heirs of Don Ramon us no alternative but to conclude that his donation was onerous, one Lopez, Sr., filed an action for annulment of donation, reconveyance and executed for a valuable consideration which is considered the equivalent of damages against CPU alleging that since 1939 up to the time the action 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 determines the starting point for the computation of the period. In this latter to erect schools, construct a children's playground and open streets case, the starting point begins with the expiration of a reasonable period on the land was considered an onerous donation. 3 Similarly, where Don and opportunity for petitioner to fulfill what has been charged upon it by Ramon Lopez donated the subject parcel of land to petitioner but imposed the donor. an obligation upon the latter to establish a medical college thereon, the donation must be for an onerous consideration. The period of time for the establishment of a medical college and the necessary buildings and improvements on the property cannot be Under Art. 1181 of the Civil Code, on conditional obligations, the quantified in a specific number of years because of the presence of several acquisition of rights, as well as the extinguishment or loss of those already factors and circumstances involved in the erection of an educational acquired, shall depend upon the happening of the event which constitutes institution, such as government laws and regulations pertaining to the condition. Thus, when a person donates land to another on the education, building requirements and property restrictions which are condition that the latter would build upon the land a school, the condition beyond the control of the donee. imposed was not a condition precedent or a suspensive condition but a 4 resolutory one. It is not correct to say that the schoolhouse had to be Thus, when the obligation does not fix a period but from its nature and constructed before the donation became effective, that is, before the circumstances it can be inferred that a period was intended, the general donee could become the owner of the land, otherwise, it would be invading rule provided in Art. 1197 of the Civil Code applies, which provides that the the property rights of the donor. The donation had to be valid before the courts may fix the duration thereof because the fulfillment of the obligation 5 fulfillment of the condition. If there was no fulfillment or compliance with itself cannot be demanded until after the court has fixed the period for the condition, such as what obtains in the instant case, the donation may compliance therewith and such period has arrived. 8 now be revoked and all rights which the donee may have acquired under it shall be deemed lost and extinguished. This general rule however cannot be applied considering the different set of circumstances existing in the instant case. More than a reasonable The claim of petitioner that prescription bars the instant action of private period of fifty (50) years has already been allowed petitioner to avail of the respondents is unavailing. 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 The condition imposed by the donor, i.e., the building of a medical do so. Hence, there is no more need to fix the duration of a term of the school upon the land donated, depended upon the exclusive will of obligation when such procedure would be a mere technicality and formality the donee as to when this condition shall be fulfilled. When and would serve no purpose than to delay or lead to an unnecessary and petitioner accepted the donation, it bound itself to comply with the expensive multiplication of suits. 9 Moreover, under Art. 1191 of the Civil condition thereof. Since the time within which the condition should Code, when one of the obligors cannot comply with what is incumbent be fulfilled depended upon the exclusive will of the petitioner, it upon him, the obligee may seek rescission and the court shall decree the has been held that its absolute acceptance and the same unless there is just cause authorizing the fixing of a period. In the acknowledgment of its obligation provided in the deed of donation absence of any just cause for the court to determine the period of the were sufficient to prevent the statute of limitations from barring compliance, there is no more obstacle for the court to decree the the action of private respondents upon the original contract which rescission claimed. was the deed of donation. 6 Finally, since the questioned deed of donation herein is basically a Moreover, the time from which the cause of action accrued for the gratuitous one, doubts referring to incidental circumstances of a gratuitous revocation of the donation and recovery of the property donated cannot be contract should be resolved in favor of the least transmission of rights and specifically determined in the instant case. A cause of action arises when interests. 10 Records are clear and facts are undisputed that since the that which should have been done is not done, or that which should not execution of the deed of donation up to the time of filing of the instant have been done is done. 7 In cases where there is no special provision for action, petitioner has failed to comply with its obligation as donee. such computation, recourse must be had to the rule that the period must Petitioner has slept on its obligation for an unreasonable length of time. be counted from the day on which the corresponding action could have Hence, it is only just and equitable now to declare the subject donation been instituted. It is the legal possibility of bringing the action which already ineffective and, for all purposes, revoked so that petitioner as donee should now return the donated property to the heirs of the donor, a valuable consideration which is considered the private respondents herein, by means of reconveyance. equivalent of the donation itself, e.g., when a donation imposes a burden equivalent to the value of the WHEREFORE, the decision of the Regional Trial Court of Iloilo, Br. 34, of 31 donation . . . . (emphasis supplied) May 1991 is REINSTATED and AFFIRMED, and the decision of the Court of Appeals of 18 June 1993 is accordingly MODIFIED. Consequently, petitioner Yet, in the last paragraph of page 8 it states that the donation is is directed to reconvey to private respondents Lot No. 3174-B-1 of the basically a gratuitous one. The pertinent portion thereof reads: subdivision plan Psd-1144 covered by Transfer Certificate of Title No. T- 3910-A within thirty (30) days from the finality of this judgment. Finally, since the questioned deed of donation herein is basically a gratuitous one, doubts referring to incidental Costs against petitioner. circumstances of a gratuitous contract should be resolved in favor of the least transmission of rights and interest . . . SO ORDERED. (emphasis supplied)

Quiason and Kapunan, JJ., concur. 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:

The word "conditions" in this article does not refer to uncertain events on which the birth or extinguishment of a Separate Opinions 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) DAVIDE, JR., J., dissenting: Clearly then, when the law and the deed of donation speaks of "conditions" I agree with the view in the majority opinion that the donation in question of a donation, what are referred to are actually the obligations, charges or is onerous considering the conditions imposed by the donor on the donee burdens imposed by the donor upon the donee and which would which created reciprocal obligations upon both parties. Beyond that, I beg characterize the donation as onerous. In the present case, the donation is, to disagree. quite obviously, onerous, but it is more properly called a "modal donation." A modal donation is one in which the donor imposes a prestation upon the donee. The establishment of the medical college as the condition of the First of all, may I point out an inconsistency in the majority opinion's donation in the present case is one such prestation. description of the donation in question. In one part, it says that the donation in question is onerous. Thus, on page 4 it states: The conditions imposed by the donor Don Ramon Lopez determines neither the existence nor the extinguishment of the obligations of the donor and We find it difficult to sustain the petition. A clear perusal of the donee with respect to the donation. In fact, the conditions imposed by the conditions set forth in the deed of donation executed Don Ramon Lopez upon the donee are the very obligations of the donation by Don Ramon Lopez, Sr., give us no alternative but to — to build the medical college and use the property for the purposes conclude that his donation was onerous, one executed for specified in the deed of donation. It is very clear that those obligations are unconditional, the fulfillment, performance, existence or extinguishment of barred by the statute of limitations. There is misplaced reliance again on a which is not dependent on any future or uncertain event or past and previous decision of this Court in Osmeña vs. Rama. 6 That case does not unknown event, as the Civil Code would define a conditional obligation. 2 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 Reliance on the case of Parks vs. Province of Tarlac 3 as cited on page 5 of debtor herself imposed a condition which will determine when she will the majority opinion is erroneous in so far as the latter stated that the fulfill her obligation to pay the creditor, thus, making the fulfillment of her condition in Parks is a resolutory one and applied this to the present case. obligation dependent upon her will. What we have here, however, is not a A more careful reading of this Court's decision would reveal that nowhere contract for a sum of money but a donation where the donee has not did we say, whether explicitly or impliedly, that the donation in that case, imposed any conditions on the fulfillment of its obligations. Although it is which also has a condition imposed to build a school and a public park admitted that the fulfillment of the conditions/obligations of the present upon the property donated, is a resolutory condition. 4 It is incorrect to say donation may be dependent on the will of the donee as to when it will that the "conditions" of the donation there or in the present case are comply therewith, this did not arise out of a condition which the donee resolutory conditions because, applying Article 1181 of the Civil Code, that itself imposed. It is believed that the donee was not meant to and does not would mean that upon fulfillment of the conditions, the rights already have absolute control over the time within which it will perform its acquired will be extinguished. Obviously, that could not have been the obligations. It must still do so within a reasonable time. What that intention of the parties. 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 What the majority opinion probably had in mind was that the conditions the donation are to be fulfilled does not ipso facto mean that the statute of are resolutory because if they are not complied with, the rights of the limitations will not apply anymore and the action to revoke the donation donee as such will be extinguished and the donation will be revoked. To becomes imprescriptible. 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 Admittedly, the donation now in question is an onerous donation and is obligations imposed by the donor. governed by the law on contracts (Article 733) and the case of Osmeña, being one involving a contract, may apply. But we must not lose sight of Third, I cannot subscribe to the view that the provisions of Article 1197 the fact that it is still a donation for which this Court itself applied the cannot be applied here. The conditions/obligations imposed by the donor pertinent law to resolve situations such as this. That the action to revoke herein are subject to a period. I draw this conclusion based on our previous the donation can still prescribe has been the pronouncement of this Court ruling which, although made almost 90 years ago, still finds application in as early as 1926 in the case of Parks which, on this point, finds relevance the present case. In Barretto vs. City of Manila, 5 we said that when the in this case. There, this Court said, 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 [that] this action [for the revocation of the donation] is 1197 (then Article 1128) are applicable and it is the duty of the court to fix prescriptible, there is no doubt. There is no legal provision a suitable time for its fulfillment. Indeed, from the nature and which excludes this class of action from the statute of circumstances of the conditions/obligations of the present donation, it can limitations. And not only this, the law itself recognizes the be inferred that a period was contemplated by the donor. Don Ramon prescriptibility of the action for the revocation of a Lopez could not have intended his property to remain idle for a long period donation, providing a special period of [four] years for the of time when in fact, he specifically burdened the donee with the obligation revocation by the subsequent birth of children [Art. 646, to set up a medical college therein and thus put his property to good use. now Art. 763], and . . . by reason of ingratitude. If no There is a need to fix the duration of the time within which the conditions special period is provided for the prescription of the action imposed are to be fulfilled. for revocation for noncompliance of the conditions of the donation [Art. 647, now Art. 764], it is because in this It is also important to fix the duration or period for the performance of the respect the donation is considered onerous and is governed by the law of contracts and the general rules of conditions/obligations in the donation in resolving the petitioner's claim 7 that prescription has already barred the present action. I disagree once prescription. more with the ruling of the majority that the action of the petitioners is not More recently, in De Luna v. Abrigo, 8 this Court reiterated the ruling in We find it difficult to sustain the petition. A clear perusal of Parks and said that: the conditions set forth in the deed of donation executed by Don Ramon Lopez, Sr., give us no alternative but to It is true that under Article 764 of the New Civil Code, conclude that his donation was onerous, one executed for actions for the revocation of a donation must be brought a valuable consideration which is considered the within four (4) years from the non-compliance of the equivalent of the donation itself, e.g., when a donation conditions of the donation. However, it is Our opinion that imposes a burden equivalent to the value of the said article does not apply to onerous donations in view of donation . . . . (emphasis supplied) the specific provision of Article 733 providing that onerous donations are governed by the rules on contracts. Yet, in the last paragraph of page 8 it states that the donation is basically a gratuitous one. The pertinent portion thereof reads: In the light of the above, the rules on contracts and the general rules on prescription and not the rules on Finally, since the questioned deed of donation herein is donations are applicable in the case at bar. basically a gratuitous one, doubts referring to incidental circumstances of a gratuitous contract should be resolved The law applied in both cases is Article 1144(1). It refers to the prescription in favor of the least transmission of rights and interest . . . of an action upon a written contract, which is what the deed of an onerous (emphasis supplied) 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 Second, the discussion on conditional obligations is unnecessary. There is donee must comply with the conditions/obligations of the donation. As to no conditional obligation to speak of in this case. It seems that the when this exactly is remains to be determined, and that is for the courts to "conditions" imposed by the donor and as the word is used in the law of do as reposed upon them by Article 1197. 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. For the reasons expressed above, I register my dissent. Accordingly, the Tolentino, citing the well-known civilists such as Castan, Perez Gonzalez decision of the Court of Appeals must be upheld, except its ruling that the and Alguer, and Colin & Capitant, states clearly the context within which conditions of the donation are resolutory. the term "conditions" is used in the law of donations, to wit:

Padilla, J., dissents 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, Separate Opinions but in its broadest sense. 1 (emphasis supplied)

DAVIDE, JR., J., dissenting: 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 I agree with the view in the majority opinion that the donation in question burdens imposed by the donor upon the donee and which would is onerous considering the conditions imposed by the donor on the donee characterize the donation as onerous. In the present case, the donation is, which created reciprocal obligations upon both parties. Beyond that, I beg quite obviously, onerous, but it is more properly called a "modal donation." to disagree. A modal donation is one in which the donor imposes a prestation upon the donee. The establishment of the medical college as the condition of the First of all, may I point out an inconsistency in the majority opinion's donation in the present case is one such prestation. description of the donation in question. In one part, it says that the donation in question is onerous. Thus, on page 4 it states: 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 It is also important to fix the duration or period for the performance of the Don Ramon Lopez upon the donee are the very obligations of the donation conditions/obligations in the donation in resolving the petitioner's claim — to build the medical college and use the property for the purposes that prescription has already barred the present action. I disagree once specified in the deed of donation. It is very clear that those obligations are more with the ruling of the majority that the action of the petitioners is not unconditional, the fulfillment, performance, existence or extinguishment of barred by the statute of limitations. There is misplaced reliance again on a which is not dependent on any future or uncertain event or past and previous decision of this Court in Osmeña vs. Rama. 6 That case does not unknown event, as the Civil Code would define a conditional obligation. 2 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 Reliance on the case of Parks vs. Province of Tarlac 3 as cited on page 5 of debtor herself imposed a condition which will determine when she will the majority opinion is erroneous in so far as the latter stated that the fulfill her obligation to pay the creditor, thus, making the fulfillment of her condition in Parks is a resolutory one and applied this to the present case. obligation dependent upon her will. What we have here, however, is not a A more careful reading of this Court's decision would reveal that nowhere contract for a sum of money but a donation where the donee has not did we say, whether explicitly or impliedly, that the donation in that case, imposed any conditions on the fulfillment of its obligations. Although it is which also has a condition imposed to build a school and a public park admitted that the fulfillment of the conditions/obligations of the present upon the property donated, is a resolutory condition. 4 It is incorrect to say donation may be dependent on the will of the donee as to when it will that the "conditions" of the donation there or in the present case are comply therewith, this did not arise out of a condition which the donee resolutory conditions because, applying Article 1181 of the Civil Code, that itself imposed. It is believed that the donee was not meant to and does not would mean that upon fulfillment of the conditions, the rights already have absolute control over the time within which it will perform its acquired will be extinguished. Obviously, that could not have been the obligations. It must still do so within a reasonable time. What that intention of the parties. 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 What the majority opinion probably had in mind was that the conditions the donation are to be fulfilled does not ipso facto mean that the statute of are resolutory because if they are not complied with, the rights of the limitations will not apply anymore and the action to revoke the donation donee as such will be extinguished and the donation will be revoked. To becomes imprescriptible. 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 Admittedly, the donation now in question is an onerous donation and is obligations imposed by the donor. governed by the law on contracts (Article 733) and the case of Osmeña, being one involving a contract, may apply. But we must not lose sight of Third, I cannot subscribe to the view that the provisions of Article 1197 the fact that it is still a donation for which this Court itself applied the cannot be applied here. The conditions/obligations imposed by the donor pertinent law to resolve situations such as this. That the action to revoke herein are subject to a period. I draw this conclusion based on our previous the donation can still prescribe has been the pronouncement of this Court ruling which, although made almost 90 years ago, still finds application in as early as 1926 in the case of Parks which, on this point, finds relevance the present case. In Barretto vs. City of Manila, 5 we said that when the in this case. There, this Court said, 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 [that] this action [for the revocation of the donation] is 1197 (then Article 1128) are applicable and it is the duty of the court to fix prescriptible, there is no doubt. There is no legal provision a suitable time for its fulfillment. Indeed, from the nature and which excludes this class of action from the statute of circumstances of the conditions/obligations of the present donation, it can limitations. And not only this, the law itself recognizes the be inferred that a period was contemplated by the donor. Don Ramon prescriptibility of the action for the revocation of a Lopez could not have intended his property to remain idle for a long period donation, providing a special period of [four] years for the of time when in fact, he specifically burdened the donee with the obligation revocation by the subsequent birth of children [Art. 646, to set up a medical college therein and thus put his property to good use. now Art. 763], and . . . by reason of ingratitude. If no There is a need to fix the duration of the time within which the conditions special period is provided for the prescription of the action imposed are to be fulfilled. 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 EVELYN DE LUNA, ROSALINA DE LUNA, PRUDENCIO DE LUNA, JR., governed by the law of contracts and the general rules of WILLARD DE LUNA, ANTONIO DE LUNA, and JOSELITO DE LUNA, prescription. 7 petitioners, vs. More recently, in De Luna v. Abrigo, 8 this Court reiterated the ruling in HON. SOFRONIO F. ABRIGO, Presiding Judge of the Court of First Parks and said that: Instance of Quezon, Branch IX, and LUZONIAN UNIVERSITY FOUNDATION, INC., respondents. It is true that under Article 764 of the New Civil Code, actions for the revocation of a donation must be brought Milberto B. Zurbano for petitioners. within four (4) years from the non-compliance of the conditions of the donation. However, it is Our opinion that Joselito E. Talabong for private respondent. 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. MEDIALDEA, J.: In the light of the above, the rules on contracts and the general rules on prescription and not the rules on This is a petition for review on certiorari of the Order dated July 7, 1981 of donations are applicable in the case at bar. respondent judge Sofronio F. Abrigo of the Court of First Instance of Quezon, Branch IX in Civil Case No. 8624 dismissing the complaint of The law applied in both cases is Article 1144(1). It refers to the prescription petitioners on the ground of prescription of action. 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 The antecedent facts are as follows: 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 On January 24, 1965, Prudencio de Luna donated a portion of 7,500 square do as reposed upon them by Article 1197. 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). For the reasons expressed above, I register my dissent. Accordingly, the The donation, embodied in a Deed of Donation Intervivos (Annex "A" of decision of the Court of Appeals must be upheld, except its ruling that the Petition) was subject to certain terms and conditions and provided for the conditions of the donation are resolutory. 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 Padilla, J., dissents 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 Republic of the Philippines foundation, in a document entitled "Revival of Donation Intervivos" (Annex SUPREME COURT "B" of Petition) subject to terms and conditions which among others, Manila required:

FIRST DIVISION xxx xxx xxx

3. That the DONEE shall construct at its own expense a Chapel, a Nursery and Kindergarten School, to be named G.R. No. L-57455 January 18, 1990 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 children and only heirs of the late Prudencio de Luna who died on August this donation; provided that the flooring of the Altar and 18, 1980, filed a complaint (pp. 14-17, Rollo) with the Regional Trial Court parts of the Chapel shall be of granoletic marble. of Quezon alleging that the terms and conditions of the donation were not complied with by the foundation. Among others, it prayed for the 4. That the construction of the Chapel, Nursery and cancellation of the donation and the reversion of the donated land to the Kindergarten School shall start immediately and must be at heirs. The complaint was docketed as Civil Case No. 8624. least SEVENTY (70) PER CENTUM finished by the end of THREE (3) YEARS from the date hereof, however, the whole In its answer (pp. 29-36, Rollo), respondent foundation claimed that it had project as drawn in the plans and specifications made parts partially and substantially complied with the conditions of the donation and of this donation must be completed within FIVE (5) YEARS that the donor has granted the foundation an indefinite extension of time from the date hereon, unless extensions are granted by the to complete the construction of the chapel. It also invoked the affirmative DONOR in writing; defense of prescription of action and prayed for the dismissal of the complaint. . . . . (p. 23, Rollo) During the pre-trial of the case, the foundation moved for a preliminary As in the original deed of donation, the "Revival of Donation Intenrivos" hearing of its affirmative defense of prescription of action which was also provided for the automatic reversion to the donor of the donated area opposed by the plaintiffs. After the parties have filed their respective in case of violation of the conditions thereof, couched in the following written motions, oppositions and memoranda, an Order (pp., 40-43, Rollo) terms: dated July 7, 1981 was issued dismissing the complaint. The dispositive portion of the Order states: xxx xxx xxx. In view of the foregoing considerations, this Court finds the 11. That violation of any of the conditions herein provided motion to dismiss deemed filed by the defendant on the shall cause the automatic reversion of the donated area to ground of prescription to be well-taken and the same is the donor, his heirs, assigns and representatives, without hereby GRANTED. the need of executing any other document for that purpose and without obligation whatever on the part of the DONOR. WHEREFORE, the instant complaint is hereby ordered (p. 24, Rollo). DISMISSED.

The foundation, through its president, accepted the donation in the same No pronouncement as to costs. 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 SO ORDERED. (pp. 42-43, Rollo) in the memorandum of encumbrances as Entry No. 17939 of Transfer Certificate of Title No. T-5775 (p. 15, Rollo). No motion for reconsideration was filed by petitioners.

On August 3, 1971, Prudencio de Luna and the foundation executed a On July 22, 1981, petitioners brought the instant petition for review with 'Deed of Segregation" (Annex "C" of Petition) whereby the area donated the following assignments of error: 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- I. THE LOWER COURT ERRED IN HOLDING THAT THE 16152 was issued in the name of the foundation. The remaining portion DONEE'S CONSENT TO THE REVOCATION OF A DONATION known as Lot No. 3707-A was retained by the donor. (p. 16, Rollo). TO BE VALID MUST BE GIVEN SUBSEQUENT TO THE EFFECTIVITY OF THE DONATION OR VIOLATION OF (THE) On September 23, 1980, herein petitioners, Evelyn, Rosalina, Prudencio, Jr., ANY OF THE CONDITIONS IMPOSED THEREIN. Willard, Antonio and Joselito, all surnamed de Luna, who claim to be the II. THE LOWER COURT ERRED IN TREATING THE COMPLAINT the parties providing for revocation in case of non-compliance, no judicial AS ONE FOR JUDICIAL DECREE OF REVOCATION OF THE action is necessary. It is then petitioners' claim that the action filed before DONATION IN QUESTION AS CONTEMPLATED IN ARTICLE the Court of First Instance of Quezon is not one for revocation of the 764 OF THE CIVIL CODE OF THE PHILIPPINES AND WHICH donation under Article 764 of the New Civil Code which prescribes in four PRESCRIBES IN FOUR (4) YEARS AND IN NOT CONSIDERING (4) years, but one to enforce a written contract which prescribes in ten (10) IT AS AN ACTION TO ENFORCE A WRITTEN CONTRACT years. WHICH PRESCRIBES IN TEN (10) YEARS AS PROVIDED IN ARTICLE 1144, HENCE, THE LOWER COURT ERRED IN The petition is impressed with merit. DISMISSING THE COMPLAINT. From the viewpoint of motive, purpose or cause, donations may be 1) III. THE LOWER COURT ERRED IN NOT RENDERING simple, 2) remuneratory or 3) onerous. A simple donation is one the cause JUDGMENT ON THE MERITS BY WAY OF JUDGMENT ON THE of which is pure liberality (no strings attached). A remuneratory donation is PLEADINGS. (pp. 1-2, Petitioner's Brief) 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, We gave due course to the petition on August 3, 1981 (p. 45, Rollo). After burdens or charges is less than the value of the donation. An onerous the parties' submission of their respective briefs, the Court resolved to donation is one which is subject to burdens, charges or future services consider the petition submitted for decision on January 27, 1982 (p. 62, equal (or more) in value than that of the thing donated (Edgardo L. Paras, Rollo). Civil Code of the Philippines Annotated, 11 ed., Vol. 11, p. 726).

The assailed order of the trial court stated that revocation (of a donation) It is the finding of the trial court, which is not disputed by the parties, that will be effective only either upon court judgment or upon consent of the the donation subject of this case is one with an onerous cause. It was made donee as held in the case of Parks v. Province of Tarlac, No. 24190, July 13, subject to the burden requiring the donee to construct a chapel, a nursery 1926, 49 Phil. 143. The trial court dismissed the claim of petitioners that and a kindergarten school in the donated property within five years from the stipulation in the donation providing for revocation in case of non- execution of the deed of donation. compliance of conditions in the donation is tantamount to the consent of the donee, opining that the consent contemplated by law should be such Under the old Civil Code, it is a settled rule that donations with an onerous consent given by the donee subsequent to the effectivity of the donation cause are governed not by the law on donations but by the rules on or violation of the conditions imposed therein. The trial court further held contracts, as held in the cases of Carlos v. Ramil, L-6736, September 5, that, far from consenting to the revocation, the donee claimed that it had 1911, 20 Phil. 183, Manalo vs. de Mesa, L-9449, February 12, 1915, 29 Phil. already substantially complied with the conditions of the donation by 495. On the matter of prescription of actions for the revocation of onerous introducing improvements in the property donated valued at more than the donation, it was held that the general rules on prescription applies. (Parks amount of the donated land. In view thereof, a judicial decree revoking the v. Province of Tarlac, supra.). The same rules apply under the New Civil subject donation is necessary. Accordingly, under Article 764 of the New Code as provided in Article 733 thereof which provides: 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 Art. 733. Donations with an onerous cause shall be counted from such non-compliance. In the instant case, the four-year governed by the rules on contracts, and remuneratory period for filing the complaint for revocation commenced on April 9, 1976 donations by the provisions of the present Title as regards and expired on April 9, 1980. Since the complaint was brought on that portion which exceeds the value of the burden September 23, 1980 or more than five (5) months beyond the prescriptive imposed. period, it was already barred by prescription. It is true that under Article 764 of the New Civil Code, actions for the On the other hand, petitioners argue that Article 764 of the New Civil Code revocation of a donation must be brought within four (4) years from the was adopted to provide a judicial remedy in case of non-fulfillment of non-compliance of the conditions of the donation. However, it is Our conditions when revocation of the donation has not been agreed upon by opinion that said article does not apply to onerous donations in view of the the parties. By way of contrast, when there is a stipulation agreed upon by specific provision of Article 733 providing that onerous donations are Commissioner of Customs, 37 SCRA 327, 334, and cases governed by the rules on contracts. cited therein).

In the light of the above, the rules on contracts and the general rules on Resort to judicial action for rescission is obviously not prescription and not the rules on donations are applicable in the case at contemplated. The validity of the stipulation can not be bar. seriously disputed. It is in the nature of a facultative resolutory condition which in many cases has been upheld, Under Article 1306 of the New Civil Code, the parties to a contract have the by this court. (Ponce Enrile v. Court of Appeals, 29 SCRA right "to establish such stipulations, clauses, terms and conditions as they 504) may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy." Paragraph 11 of the "Revival of However, in the University of the Philippines v. Angeles case, (supra), it Donation Intervivos, has provided that "violation of any of the conditions was held that in cases where one of the parties contests or denies the (herein) shall cause the automatic reversion of the donated area to the rescission, "only the final award of the court of competent jurisdiction can donor, his heirs, . . ., without the need of executing any other document for conclusively settle whether the resolution is proper or not." It was held, that purpose and without obligation on the part of the DONOR". Said thus: stipulation not being contrary to law, morals, good customs, public order or public policy, is valid and binding upon the foundation who voluntarily . . . since in every case, where the extrajudicial resolution consented thereto. is contested, only the final award of the court of competent jurisdiction can conclusively settle whether the resolution The validity of the stipulation in the contract providing for the automatic was proper or not. It is in this sense that judicial action will reversion of the donated property to the donor upon non-compliance be necessary as without it, the extrajudicial resolution will cannot be doubted. It is in the nature of an agreement granting a party the remain contestable and subject to judicial invalidation, right to rescind a contract unilaterally in case of breach, without need of unless attack thereon should become barred by going to court. Upon the happening of the resolutory condition of non- acquiescence, estoppel or prescription. compliance with the conditions of the contract, the donation is automatically revoked without need of a judicial declaration to that effect. It is clear, however, that judicial intervention is necessary not for purposes In the case of University of the Philippines v. de los Angeles, L-28602, of obtaining a judicial declaration rescinding a contract already deemed September 29, 1970, 35 SCRA 102-107, it was held: rescinded by virtue of an agreement providing for rescission even without judicial intervention, but in order to determine whether or not the . . . There is nothing in the law that prohibits the parties recession was proper. from entering into agreement that violation of the terms of the contract would cause cancellation thereof. even The case of Parks v. Province of Tarlac, supra, relied upon by the trial without court intervention. In other words, it is not always court, is not applicable in the case at bar. While the donation involved necessary for the injured party to resort to court for therein was also onerous, there was no agreement in the donation rescission of the contract (Froilan v. Pan Oriental Shipping providing for automatic rescission, thus, the need for a judicial declaration Co., et al., revoking said donation. L-11897, 31 October 1964, 12 SCRA 276). The trial court was therefore not correct in holding that the complaint in This was reiterated in the case of Angeles v. Calasanz, L-42283, March 18, the case at bar is barred by prescription under Article 764 of the New Civil 1985: Code because Article 764 does not apply to onerous donations.

Well settled is, however, the rule that a judicial action for As provided in the donation executed on April 9, 1971, complaince with the the rescission of a contract is not necessary where the terms and conditions of the contract of donation, shall be made within five contract provides that it may be revoked and cancelled for (5) years from its execution. The complaint which was filed on September violation of any of its terms and conditions (Lopez v. 23, 1980 was then well within the ten (10) year prescriptive period to Regional Trial Court (RTC) of Santiago City, Isabela, Branch 35, in Civil enforce a written contract (Article 1144[1], New Civil Code), counted from Case No. 35-2397. April 9, 1976. The spouses Rufino Dulay, Sr. and Ignacia Vicente were the owners of a Finally, considering that the allegations in the complaint on the matter of parcel of land located in Rizal, Santiago, Isabela, with an area of 29,002 the donee's non-compliance with the conditions of the donation have been square meters. The lot was covered by Original Certificate of Title No. P- contested by private respondents who claimed that improvements more 6776. valuable than the donated property had been introduced, a judgment on the pleadings is not proper. Moreover, in the absence of a motion for On August 3, 1981, the spouses Dulay executed a deed of donation3 over a judgment on the pleadings, the court cannot motu proprio render such 10,000-square-meter portion of their property in favor of the Ministry of judgment. Section 1 of Rule 19 provides: "Where an answer fails to tender Education and Culture (now the Department of Education, Culture and an issue, or otherwise admits the material allegations of the adverse Sports [DECS]). The deed provided, among others: party's pleading, the court may, on motion of that party, direct judgment on such pleading." (Emphasis supplied) That for and in consideration of the benefits that may be derived from the use of the above described property which is intended for school purposes, ACCORDINGLY, the petition is GRANTED. Civil Case No. 8624 is hereby the said DONORS do by by (sic) these presents TRANSFER AND CONVEY by ordered reinstated. Respondent judge is ordered to conduct a trial on the way of DONATION unto the DONEE, its successors and assigns, the above merits to determine the propriety of the revocation of the subject donation. property to become effective upon the signing of this document.4

SO ORDERED. The property was subdivided. On April 13, 1983, Transfer Certificate of Title (TCT) No. T-1433375 covering the portion identified as Lot 8858-A was Narvasa, Cruz, Gancayco and Griño-Aquino, JJ., concur. issued in the name of the Ministry of Education and Culture, represented by Laurencio C. Ramel, the Superintendent of Schools of Isabela. However, Republic of the Philippines the property was not used for school purposes and remained idle. SUPREME COURT Manila Sometime in 1988, the DECS, through its Secretary, started construction of the Rizal National High School building on a parcel of land it acquired from FIRST DIVISON Alejandro Feliciano. The school site was about 2 kilometers away from the land donated by the spouses Dulay. G.R. No. 164748 January 27, 2006 In a letter6 to the DECS Secretary dated August 19, 1994, the spouses THE SECRETARY OF EDUCATION and DR. BENITO TUMAMAO, Dulay requested that the property be returned to them considering that Schools Division Superintendent of Isabela, Petitioners, the land was never used since 1981, or a period of more than 13 years. On August 28, 1994, the Barangay Council of Rizal, Santiago City issued vs. 7 HEIRS OF RUFINO DULAY, SR., represented by IGNACIA VICENTE, Resolution No. 39 recognizing the right of the donors to redeem the RUFINO DULAY, JR., SUSANA DULAY, ADELAIDA DULAY, subject parcel of land because of the DECS’ failure to utilize it for the LUZVIMINDA DULAY and CECILIA DULAY, Respondents. intended purpose. It further resolved that the Rizal National High School no longer needed the donated land "considering its distance from the main campus and [the] failure to utilize the property for a long period of time." D E C I S I O N On December 22, 1994, Rufino Dulay, Sr. passed away at the age of 80.8 CALLEJO, SR., J.: His heirs sought the help of the Sangguniang Panlungsod of Santiago City via an undated letter9 requesting the approval of a resolution allowing This is a petition for review on certiorari of the Decision1 of the Court of them to redeem the donated property. The Sangguniang Panlungsod Appeals (CA) in CA-G.R. CV No. 78314 which affirmed the Decision2 of the denied the request inasmuch as the city government was not a party to On December 26, 2002, the trial court rendered its decision in favor of the deed of donation.10 respondents. The fallo reads:

On August 31, 1997, the heirs of Dulay, Sr., herein respondents, filed a WHEREFORE, in the light of the foregoing considerations, the Court hereby complaint for the revocation of the deed of donation and cancellation of DECLARES the deed of donation, Exhibit "A," executed by the late Rufino TCT No. T-143337 before the RTC of Santiago City, Isabela, Branch 35, Dulay, Sr. and his wife Ignacia Vicente over a portion of the land covered against the DECS Secretary and Dr. Benito Tumamao, the Schools Division by O.C.T. No. P-6776 and now covered by T.C.T. No. T-143337 in the name Superintendent of Isabela. Respondents alleged that there was a condition of the donee Department of Education and Culture as REVOKED. The in the deed of donation: that the DECS, as donee, utilize the subject defendant DECS is ORDERED to execute the deed of reconveyance of the property for school purposes, that is, the construction of a building to land in favor of the plaintiffs heirs of Rufino Dulay, Sr. house the Rizal National High School. Respondents alleged that the DECS did not fulfill the condition and that the land remained idle up to the SO ORDERED.14 present. Respondents also averred that the donation inter vivos was inofficious, since the late Rufino Dulay, Sr. donated more than what he In revoking the deed of donation, the trial court ruled that the donation could give by will. was subject to a resolutory condition, namely, that the land donated shall be used for school purposes. It was no longer necessary to determine the Petitioners, through the Office of the Solicitor General (OSG), interposed intended "school purpose" because it was established that the donee did the following defenses: (a) the DECS complied with said condition because not use the land. Thus, the condition was not complied with since the the land was being used by the school as its technology and home property was donated in July 1981. Moreover, the DECS did not intend to economics laboratory; (b) the donation was not inofficious for the donors use the property for school purposes because a school had already been were the owners of five other parcels of land, all located at Rizal, Santiago built and established in another lot located in the same barangay, about City; (c) the DECS acquired the disputed property by virtue of purchase two kilometers away from the subject land. Finally, the trial court rejected made on December 8, 1997 by the barangay of Rizal, Santiago City in the petitioners’ contention that the donation was inofficious. amount of P18,000.00 as certified by its former Barangay Captain, Jesus 11 San Juan; and (d) the action of the respondents had prescribed. The OSG Aggrieved, the OSG appealed the decision to the CA. also claimed that students planted a portion of the land with rice, mahogany seedlings, and fruit-bearing trees; the produce would then be sold and the proceeds used for the construction of a school building on the On July 30, 2004, the appellate court rendered judgment affirming the subject property. decision. The court held that the DECS failed to comply with the condition in the donation, that is, to use the property for school purposes. The CA

12 further ruled that the donation was onerous considering that the donee In their Reply, respondents denied that the donated land was being used was burdened with the obligation to utilize the land for school purposes; as a technology and home economics laboratory, and averred that there therefore, the four-year prescriptive period under Article 764 of the New were no improvements on the property. Moreover, the fact that rice was Civil Code did not apply. Moreover, the CA declared that a deed of donation planted on the lot was contrary to the intended purpose of the donation. is considered a written contract and is governed by Article 1144 of the New The respondents likewise denied that the property had been sold to the Civil Code, which provides for a 10-year prescriptive period from the time barangay. While the other properties of the late donor had been sold, the the cause of action accrues. According to the CA, the respondents’ cause deeds thereon had not been registered, and the tax declarations not yet of action for the revocation of the donation should be reckoned from the transferred in the names of the purchasers. expiration of a reasonable opportunity for the DECS to comply with what was incumbent upon it. Thereafter, trial ensued. On March 6, 2001, an ocular inspection of the property was conducted by the parties and their respective counsels, Petitioners filed a motion for reconsideration, which the CA denied. including the Presiding Judge. It was confirmed that the land was barren, save for a small portion which was planted with palay. A demolished house was also found in the periphery of the donated lot.13 Petitioners seek relief from this Court via petition for review on certiorari, contending that: I. are still being used by the Rizal National High School for the construction and improvement of its present school site. Moreover, it was verified that THE DEPARTMENT OF EDUCATION, THROUGH THE RIZAL NATIONAL there was palay planted on the donated property during the ocular HIGH SCHOOL, HAD COMPLIED WITH THE CONDITION IMPOSED IN inspection on the property. THE DEED OF DONATION. In their comment on the petition, respondents dispute petitioners’ II. contentions, and aver that no evidence was presented to prove that, indeed, palay, mahogany seedlings and fruit-bearing trees were planted on RESPONDENTS’ RIGHT TO SEEK THE REVOCATION OF THE DEED OF the property. Respondents also emphasized that when the trial court DONATION, IF THERE BE ANY, IS ALREADY BARRED BY inspected the subject property, it was discovered to be barren and without PRESCRIPTION AND LACHES.15 any improvement although some portions thereof were planted with palay. Petitioners even failed to adduce evidence to identify the person who planted the palay. The Court shall resolve the issues raised by petitioners seriatim. The contention of petitioners has no merit. The donee failed to comply with the condition imposed in the deed of donation As gleaned from the CA decision, petitioners failed to prove that the donated property was used for school purposes as indicated in the deed of The issue of whether or not petitioner DECS was able to comply with the donation: condition imposed in the deed of donation is one of fact. There is a question of fact when the doubt or difference arises as to the truth or falsehood of alleged facts or when the query necessarily solicits calibration We find it difficult to sustain that the defendant-appellants have complied of the whole evidence considering mostly the credibility of witnesses, with the condition of donation. It is not amiss to state that other than the existence and relevancy of specific surrounding circumstances, their bare allegation of the defendant-appellants, there is nothing in the records relation to each other and to the whole and probabilities of the situation.16 that could concretely prove that the condition of donation has been Under Rule 45 of the 1997 Rules of Civil Procedure, only questions of law complied with by the defendant-appellants. In the same breadth, the may be raised in a petition for review on certiorari, for the simple reason planting of palay on the land donated can hardly be considered and could that this Court is not a trier of facts. It is not for the Court to calibrate the not have been the "school purposes" referred to and intended by the evidence on record, as this is the function of the trial court. Although there donors when they had donated the land in question. Also, the posture of are well-defined exceptions to the rule, nevertheless, after a review of the the defendant-appellants that the land donated is being used as records, we find no justification to depart therefrom. Moreover, the trial technology and home economics laboratory of the Rizal National High court’s findings of facts, as affirmed by the appellate court on appeal, are School is far from being the truth considering that not only is the said binding on this Court, unless the trial and appellate courts overlooked, school located two kilometers away from the land donated but also there misconstrued or misinterpreted facts and circumstances of substance was not even a single classroom built on the land donated that would which, if considered, would change the outcome of the case. The case has reasonably indicate that, indeed, classes have been conducted therein. been reviewed thoroughly, and we find no justification to reverse the CA These observations, together with the unrebutted ocular inspection report decision. made by the trial court which revealed that the land donated remains idle and without any improvement thereon for more than a decade since the time of the donation, give Us no other alternative but to conclude that the Petitioners, through the OSG, maintain that the condition (to use the defendant-appellants have, indeed, failed to comply with what is property for school purposes) is not limited to the construction of a school incumbent upon them in the deed of donation.17 building, but includes utilizing it as a technology and home economics laboratory where students and teachers plant palay, mahogany seedlings, 18 and fruit-bearing trees. The OSG insists that the donee did not specify in In its Order dated March 6, 2001, the RTC reiterated that during the the deed that the property should be used for the construction of a school ocular inspection of the property conducted in the presence of the litigants building. According to the OSG, the proceeds of the harvest were used and and their counsel, it observed that "the land was barren; there were no improvements on the donated property though a portion thereof was donation fixed no period within which the donee can comply with the planted with palay [and a demolished house built in 1979.]" condition of donation. As such, resort to Article 1197 of

Moreover, petitioners failed to adduce a shred of evidence to prove that the New Civil Code is necessary. Said article provides that if the obligation the palay found in the property was planted by DECS personnel or at its does not fix a period, but from its nature and the circumstances it can be instance or even by students of the Rizal National High School. No inferred that a period was intended, the courts may fix the duration evidence was adduced to prove that there were existing plans to use the thereof. Indeed, from the nature and circumstances of the condition of the property for school purposes. Petitioners even debilitated their cause when subject donation, it can be inferred that a period was contemplated by the they claimed in the trial court that the barangay acquired the property by donors. The donors could not have intended their property to remain idle purchase, relying on the certification of former Barangay Captain Jesus San for a very long period of time when, in fact, they specifically obliged the Juan. defendant-appellants to utilize the land donated for school purposes and thus put it in good use. xxx20 The right to seek the revocation of donation had not yet prescribed when respondents filed their complaint In Central Philippine University v. Court of Appeals,21 a case squarely in point, we have established that the legal possibility of bringing the action Anent the second issue, we reject the contention of the OSG that begins with the expiration of a reasonable opportunity for the donee to respondents’ cause of action is already barred by prescription under Article fulfill what has been charged upon it by the donor. Likewise, we held that 764 of the New Civil Code, or four years from the non-compliance with the even if Article 1197 of the New Civil Code provides that the courts may fix condition in the deed of donation. Since such failure to comply with the the duration when the obligation does not determine the period but from condition of utilizing the property for school purposes became manifest its nature and circumstances it can be inferred that a period was intended, sometime in 1988 when the DECS utilized another property for the the general rule cannot be applied because to do so would be a mere construction of the school building, the four-year prescriptive period did technicality and would serve no other purpose than to delay or lead to an 22 not commence on such date. Petitioner was given more than enough time unnecessary and expensive multiplication of suits. to comply with the condition, and it cannot be allowed to use this fact to its advantage. It must be stressed that the donation is onerous because the Altogether, it has been 16 years since the execution of the deed of DECS, as donee, was burdened with the obligation to utilize the land donation. Petitioner DECS failed to use the property for the purpose donated for school purposes. Under Article 733 of the New Civil Code, a specified in the deed of donation. The property remained barren and donation with an onerous cause is essentially a contract and is thus unutilized. Even after respondents sought the return of the property before governed by the rules on contract.19 We fully agree with the ruling of the the courts, petitioner DECS still failed to draw up plans to use the property appellate court: for school purposes. In fine, petitioner DECS has no use for the property; hence, the same shall be reverted to the respondents. xxx With this, [we] decline to apply the four-year prescriptive period for the revocation of donation provided under Article 764 of the New Civil Code WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals and instead apply the general rules on contracts since Article 733 of the in CA-G.R. CV No. 78314 dated July 30, 2004 is AFFIRMED. same Code, specifically provided that onerous donations shall be governed by the rules on contracts. SO ORDERED.

Corollarily, since a deed of donation is considered a written contract, it is Republic of the Philippines governed by Article 1144 of the New Civil Code, which provides that the SUPREME COURT prescriptive period for an action arising from a written contract is ten (10) Manila years from the time the cause of action accrues. In the case of donation, the accrual of the cause of action is from the expiration of the time within EN BANC which the donee must comply with the conditions or obligations of the donation. In the instant case, however, it must be noted that the subject G.R. No. L-48676 April 26, 1949 LEON ORACION, petitioner, On February 20, 1937, final deed of sale was executed by the sheriff in vs. favor of Oracion as no redemption or repurchase had been effected either PACITA JUANILLO and FRANCISCO PRINCIPE, respondents. by Principe or by Cecilio Juanillo.

Estanislao A. Fernandez for petitioner. Oracion secured a writ for the possession of the land, but Principe refused Marcelino Lontok for respondent Pacita Juanillo. to deliver it on the strength of the deed of donation of December 31, 1923, Cirilo L. Villamin for respondent Francisco Principe. and on his contention that the indebtedness upon which Oracion secured judgment in Cavinti had already been paid. PERFECTO, J.: Pacita Juanillo claims that the Cavinti judgment was secured through fraud This certiorari proceeding was initiated in this Court before the last war on and collusion between Oracion and Principe and that the property is a October 23, 1941. It was finally submitted for our decision in March 1947. private is a private property of her father. The facts as found both by the trial court and by the Court of Appeals are follows: The Cavinti proceedings appear, however, to be regular.

Cecilio Juanillo, married to Maria Perolina, was the owner of the land in The present case is a three-cornered legal controversy between Pacita question since before 1924. In 1928, it was assessed in his name. Juanillo, as heir, Principe, as donee, and Oracion, as auction purchaser in virtue of the Cavinti judgment. Francisco Principe lived and grew up with the spouses who had no children. Pacita Juanillo contended that, with her birth, the donation in favor of On December 31, 1923, the land was donated to Francisco Principe, this Principe was ipso facto revoked, and upon her father's death in 1938, she donation having been perfected with the latter's acceptance. inherited the property, while her father's obligation to Oracion had been extinguished by payment. In 1934, upon Maria Perolina's death, Cecilio Juanillo married Barbara Juanillo. Principe's contention is that the land was a conjugal property of Cecilio Juanillo with his first wife Maria Perolina; that the donation was only Pacita Juanillo was born unto this marriage on October 27, 1934. partially revoked as to the one-half of the property which belonged to the deceased's first wife, Maria Perolina, and that this signature in the waiver of his claim was obtained by Oracion through fraud and deceit. Cecilio Juanillo died on May 30, 1938. Oracion bases his claim on his auction. Leon Oracion obtained judgment from the justice of the peace Court of Cavinti, ordering Cecilio Juanillo to deliver four cows and their calves or to pay P300 and, in virtue of a writ of execution issued the previous day, the The Court of Appeal found, in concurrence with the trial court, that the land sheriff attached the land on January 25, 1936, and announced its auction in question was an exclusive property of Cecilio Juanillo, who inherited it on February 19, 1936. from his father Salvador Juanillo, and that fact is expressly stated in the deed of donation. Principe filed a third party claim but the sale took place upon the filing by Leon Oracion of an indemnity bond. With the usufruct reserved to the donors, the property had belonged to Principe since the date of the donation, December 31, 1923, and Principe's possession had been peaceful until was distributed on January 23, 1936, On March 1, 1936, Principe filed a statement of withdrawals of claim to the when the sheriff attached it under the Cavinti judgment. The land property upon the filing by Oracion of a statement that he was giving continued to be listed in the name of Cecilio Juanillo for tax purposes and Principe the right to repurchase the property within the period of one year. Principe and his donors had been contributing in the payment of taxes. The land mentioned was more than thirty one hectares, was assessed at The Court of Appeal found the instrument vitiated with fraud and declared P950 and had a market value of P3,000. it, accordingly, ineffective.

The Court of Appeals found that Principe does not know how to read and The Court of Appeals declared ineffective the purchase auction of Oracion was duped by Oracion into signing the waiver Exhibit A-14 which reads as on the ground that, at the time the auction took place, the property follows:. belonged to Principe who was not a party to the Cavinti judgment, but declared, finally, in virtue of the provisions of Article 664 of the Civil Code, Yo, Francisco Principe, esposo de Ambrosia Conde, mayor de edad, that the land belongs to Pacita Juanillo to whom it was adjudicated. vecino y natural del barrio de Talaugan, Cavinti, Laguna, por la presente escritura hago presente y manifiesto al sheriff provincial Oracion and Principe filed motions for reconsideration. The Court of de Laguna los siguientes: Appeals denied the motion of Oracion, but granted that of Principe and, accordingly, by resolution of September 3, 1941, modified the judgment by Primero. Soy el mismo Francisco Principe gue en 18 de este mes ordering Pacita Juanillo to reimburse Principe for the value of his de Febrero pasado, 1936, fue sido requerido por el abogado Sr. improvements on the land, amounting to P1,000 or, if she so prefers, to Maximo T. Grifal en presencia del notario publico Sr. Victor Mesina, exercise the option allowed her under Article 361 of the Civil Code, and en Cavinti, Laguna, en un supuesto escrito de terceria al embargo declaring Principe to beentitled to one-half of the improvements existing que se estaba haciendo el sheriff provincial el terreno de mi padre, on the first and third parcels described in the deed of donation, which Cecilio Juanillo, al mencionado embargo, para segun ellos, que yo improvements corresponded to Maria Perolina as her share in the conjugal reclamodicho terreno embargado de acuerdo, segun ellos, con una partnership with Cecilio Juanillo. supuesta donacion de dicho terreno a mi favor er una escritura de fecha 5 de Enero, 1924, que lo hemos firmado ante el Sr. Glicerio Both Principe and Pacita Juanillo are agreeable to the decision of the Court Pereña, Reg. No. 2, pagina 77 Srie 1942. La tercreria es-Reg. 24, of Appeals as amended, but Oracion came to us seeking several of the pagina 31, Libro IV de 1936 del Notario Victor Mesina. decision and praying that he be declared the absolute owner of the property inquestion, subject to the modification contained in the resolution Segundo. Comparece de bueno ante otro Notario aqui en of September 3, 1941, that Principe be ordered to pay him damages or, as Pagsanjan, Laguna, hoy fecha porque quier hacer constar que alternative, that the property in question be declared subject to the Cavinti declaro nulo y de ninguin valor la mencionada terceria que hizo el money judgment, which must be paid by Pacita Juanillo within suchperiod abogado Sr. Maximo T. Grifal suspuestamente jurado por mi en as the Court may fix, failing which the property shall be sold at public presencia del Notario Victor Mesina porque no es verdad que el auction. terreno o los terrenos mencionado en la escritura que hemos firmado ante el Notario Glicerio Pereña en el año 1924 y There is no controversy that Principe became the owner of the land in mencionado en el parrafo precedente han sido donados y question, composed of three parcels, in virtue of the donation of entregados a mi favor porque aparte de que no se me ha December31, 1923. entragado algun documento al efecto, sobre dicha donacion, y yo no he acetado o no recuerdo haberla aceptado dicha donacion, no In virtue of the birth of Pacita Juanillo on October 27, 1934, the donation estoy ademas en posesion de cualquiera de los referidos terrenos, was revoked pursuant to article 644 of the Civil Code, and the property is ni tengo hoja declaratoria o amillaramiento que se me haya to be reverted to the donor, according to article 645 of the same Code, but traspasado, y la verdad es que mi referido mi referido semi-padre both the revocation and the return of the property to the donor or his heir el Sr. Cecilio Juanillo es el completo y absoluto dueño y poseedor are not self-operative or self-executory and if the donee should refuse to de todas las propiedades descritas en dicha donacion desde part with the property, resort to judicial action should be taken under entonces de su muerte, y yo y mi esposa no tenemos ninguna article 646 of the Civil Code, which provides, further, that the action cannot intervencion o interest en las mencionadas propiedades o en be renounced and shall be transmitted on the death of the donor to his cualquiera de ellas. children and to their legitimate descendants. As Principe did not re-deliver the property to the donor Cecilio Juanillo, EUSEBIO DE CASTRO and MARTINA RIETA, represented by MARINA thereversion of the property to Pacita Juanillo will only become effective RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents. upon the execution of the judgment of the Court of Appeals. Pacita's appearancein this case as intervenor, claiming the property, served the G.R. No. 77450 June 19, 1991 purpose of anaction for revocation provided for by article 646 of the Civil Code. When Pacita, as represented by her mother Barbara Juanillo, filed THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN her interventionon February 20, 1939, she was not yet five years old and, CATHOLIC BISHOP OF IMUS, and the SPOUSES FLORENCIO IGNAO therefore, the intervention was filed within the five years provided by and SOLEDAD C. IGNAO, petitioners, article 646 of the Civil Code, or ten years fixed by Chapter II, of Act No. vs. 190. HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA RIETA, represented by MARINA As necessary consequence, the attachment of the property and its sale at RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents. public auction to Oracion on February 19, 1936, could and cannot produce any legal effect, because the execution was directed against Cecilio Severino C. Dominguez for petitioner Roman Catholic Bishop of Imus, Juanillo, while the property executed did not belong yet to Cecilio Juanillo Cavite. and stillbelonged to Principe, who has not been and was not a party to the Cavinti judgment. Dolorfino and Dominguez Law Offices for Sps. Ignao. But Oracion has not lost his right to collect his claim for the sum of P300, credited to him by the Cavinti judgment. His complaint in this case filed on Joselito R. Enriquez for private respondents. June 11, 1937, to all legal intents and purposes, after the death of Cecilio Juanillo on May 30, 1938, can be considered as a claim against his estate, and considered as a lien on the property against the heir of Pacita Juanillo. The period of sixty days from the date this decision becomes final is a REGALADO, J.:p reasonable time within which Pacita Juanillo must pay said indebtedness. These two petitions for review on certiorari 1 seek to overturn the decision Thus modified, the decision of the Court of Appeals is affirmed. of the Court of Appeals in CA-G.R. CV No. 05456 2 which reversed and set aside the order of the Regional Trial Court of Imus, Cavite dismissing Civil Moran, C.J., Paras, Feria, Pablo, Bengzon, Briones, and Tuason, JJ., concur. Case No. 095-84, as well as the order of said respondent court denying petitioner's motions for the reconsideration of its aforesaid decision. Republic of the Philippines SUPREME COURT On November 29, 1984, private respondents as plaintiffs, filed a complaint Manila for nullification of deed of donation, rescission of contract and reconveyance of real property with damages against petitioners Florencio SECOND DIVISION 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 G.R. No. 77425 June 19, 1991 Civil Case No. 095-84 therein. 3

THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN In their complaint, private respondents alleged that on August 23, 1930, CATHOLIC BISHOP OF IMUS, and the SPOUSES FLORENCIO IGNAO the spouses Eusebio de Castro and Martina Rieta, now both deceased, and SOLEDAD C. IGNAO, petitioners, executed a deed of donation in favor of therein defendant Roman Catholic vs. Archbishop of Manila covering a parcel of land (Lot No. 626, Cadastral HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES 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 On December 23, 1986, respondent Court of Appeals, holding that the hundred (100) years from the execution of the deed of donation, otherwise action has not yet prescibed, rendered a decision in favor of private a violation of such condition would render ipso facto null and void the deed respondents, with the following dispositive portion: of donation and the property would revert to the estate of the donors. WHEREFORE, the Order of January 31, 1985 dismissing It is further alleged that on or about June 30, 1980, and while still within appellants' complaint is SET ASIDE and Civil Case No. 095- the prohibitive period to dispose of the property, petitioner Roman Catholic 84 is hereby ordered REINSTATED and REMANDED to the Bishop of Imus, in whose administration all properties within the province lower court for further proceedings. No Costs. 7 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 Petitioners Ignao and the Roman Catholic Bishop of Imus then filed their the donation in favor of petitioners Florencio and Soledad C. Ignao in separate motions for reconsideration which were denied by respondent consideration of the sum of P114,000. 00. As a consequence of the sale, Court of Appeals in its resolution dated February 6, 1987, 8 hence, the filing Transfer Certificate of Title No. 115990 was issued by the Register of of these appeals by certiorari. Deeds of Cavite on November 15, 1980 in the name of said petitioner spouses. 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 What transpired thereafter is narrated by respondent court in its assailed which provides that "(t)he donation shall be revoked at the instance of the 4 decision. On December 17, 1984, petitioners Florencio Ignao and Soledad donor, when the donee fails to comply with any of the conditions which the C. Ignao filed a motion to dismiss based on the grounds that (1) herein former imposed upon the latter," and that "(t)his action shall prescribe private respondents, as plaintiffs therein, have no legal capacity to sue; after four years from the non-compliance with the condition, may be and (2) the complaint states no cause of action. transmitted to the heirs of the donor, and may be exercised against the donee's heirs. 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 We do not agree. 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. 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 On January 9, 1985, the Roman Catholic Archbishop of Manila likewise filed non-compliance of the conditions of the donation, the same is not a motion to dismiss on the ground that he is not a real party in interest applicable in the case at bar. The deed of donation involved herein and, therefore, the complaint does not state a cause of action against him. expressly provides for automatic reversion of the property donated in case of violation of the condition therein, hence a judicial declaration revoking After private respondents had filed their oppositions to the said motions to the same is not necessary, As aptly stated by the Court of Appeals: dismiss and the petitioners had countered with their respective replies, with rejoinders thereto by private respondents, the trial court issued an By the very express provision in the deed of donation itself order dated January 31, 1985, dismissing the complaint on the ground that that the violation of the condition thereof would render 5 the cause of action has prescribed. ipso facto null and void the deed of donation, WE are of the opinion that there would be no legal necessity anymore to Private respondents thereafter appealed to the Court of Appeals raising the have the donation judicially declared null and void for the issues on (a) whether or not the action for rescission of contracts (deed of reason that the very deed of donation itself declares it so. donation and deed of sale) has prescribed; and (b) whether or not the For where (sic) it otherwise and that the donors and the dismissal of the action for rescission of contracts (deed of donation and donee contemplated a court action during the execution of deed of sale) on the ground of prescription carries with it the dismissal of the deed of donation to have the donation judicially the main action for reconveyance of real property. 6 rescinded or declared null and void should the condition be violated, then the phrase reading "would render ipso facto null and void" would not appear in the deed of donation. 9 In support of its aforesaid position, respondent court relied on the rule that intervention, but in order to determine whether or not the rescission was a judicial action for rescission of a contract is not necessary where the proper. 14 contract provides that it may be revoked and cancelled for violation of any 10 of its terms and conditions. It called attention to the holding that there is When a deed of donation, as in this case, expressly provides for automatic nothing in the law that prohibits the parties from entering into an revocation and reversion of the property donated, the rules on contract agreement that a violation of the terms of the contract would cause its and the general rules on prescription should apply, and not Article 764 of cancellation even without court intervention, and that it is not always the Civil Code. Since Article 1306 of said Code authorizes the parties to a necessary for the injured party to resort to court for rescission of the contract to establish such stipulations, clauses, terms and conditions not 11 contract. It reiterated the doctrine that a judicial action is proper only contrary to law, morals, good customs, public order or public policy, we are when there is absence of a special provision granting the power of of the opinion that, at the very least, that stipulation of the parties 12 cancellation. providing for automatic revocation of the deed of donation, without prior judicial action for that purpose, is valid subject to the determination of the It is true that the aforesaid rules were applied to the contracts involved propriety of the rescission sought. Where such propriety is sustained, the therein, but we see no reason why the same should not apply to the decision of the court will be merely declaratory of the revocation, but it is donation in the present case. Article 732 of the Civil Code provides that not in itself the revocatory act. 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 On the foregoing ratiocinations, the Court of Appeals committed no error in donations. Now, said Title III does not have an explicit provision on the holding that the cause of action of herein private respondents has not yet matter of a donation with a resolutory condition and which is subject to an prescribed since an action to enforce a written contract prescribes in ten express provision that the same shall be considered ipso facto revoked (10) years. 15 It is our view that Article 764 was intended to provide a upon the breach of said resolutory condition imposed in the deed therefor, judicial remedy in case of non-fulfillment or contravention of conditions as is the case of the deed presently in question. The suppletory application specified in the deed of donation if and when the parties have not agreed of the foregoing doctrinal rulings to the present controversy is on the automatic revocation of such donation upon the occurrence of the consequently justified. contingency contemplated therein. That is not the situation in the case at bar. 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- Nonetheless, we find that although the action filed by private respondents compliance of the condition was upheld in the recent case of De Luna, et may not be dismissed by reason of prescription, the same should be 13 al. vs. Abrigo, et al. It was held therein that said stipulation is in the dismissed on the ground that private respondents have no cause of action nature of an agreement granting a party the right to rescind a contract against petitioners. 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 The cause of action of private respondents is based on the alleged breach conditions of the contract, the donation is automatically revoked without by petitioners of the resolutory condition in the deed of donation that the need of a judicial declaration to that effect. While what was the subject of property donated should not be sold within a period of one hundred (100) that case was an onerous donation which, under Article 733 of the Civil years from the date of execution of the deed of donation. Said condition, in Code is governed by the rules on contracts, since the donation in the case our opinion, constitutes an undue restriction on the rights arising from at bar is also subject to the same rules because of its provision on ownership of petitioners and is, therefore, contrary to public policy. automatic revocation upon the violation of a resolutory condition, from parity of reasons said pronouncements in De Luna pertinently apply. 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 The rationale for the foregoing is that in contracts providing for automatic accepted, the donee becomes the absolute owner of the property donated. revocation, judicial intervention is necessary not for purposes of obtaining Although the donor may impose certain conditions in the deed of donation, a judicial declaration rescinding a contract already deemed rescinded by the same must not be contrary to law, morals, good customs, public order virtue of an agreement providing for rescission even without judicial 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 respondent court, both on the issue of prescription. That ruling of an indispensable attribute of ownership. Such a prohibition against respondent court interpreting said provision was assigned as an error in alienation, in order to be valid, must not be perpetual or for an the present petition. While the issue of the validity of the same provision unreasonable period of time. 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 Certain provisions of the Civil Code illustrative of the aforesaid policy may very same provision. be considered applicable by analogy. Under the third paragraph of Article 494, a donor or testator may prohibit partition for a period which shall not This Court is clothed with ample authority to review matters, even if they exceed twenty (20) years. Article 870, on its part, declares that the are not assigned as errors on appeal, if it finds that their consideration is dispositions of the testator declaring all or part of the estate inalienable for necessary in arriving at a just decision of the case: 16 Thus, we have held more than twenty (20) years are void. that an unassigned error closely related to an error properly assigned, 17 or upon which the determination of the question properly assigned is It is significant that the provisions therein regarding a testator also dependent, will be considered by the appellate court notwithstanding the 18 necessarily involve, in the main, the devolution of property by gratuitous failure to assign it as error. 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 Additionally, we have laid down the rule that the remand of the case to the property should be deemed anathema to the basic and actual intent of lower court for further reception of evidence is not necessary where the either the donor or testator. For that reason, the regulatory arm of the law Court is in a position to resolve the dispute based on the records before it. is or must be interposed to prevent an unreasonable departure from the On many occasions, the Court, in the public interest and for the normative policy expressed in the aforesaid Articles 494 and 870 of the expeditious administration of justice, has resolved actions on the merits Code. 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 19 In the case at bar, we hold that the prohibition in the deed of donation case. The aforestated considerations obtain in and apply to the present against the alienation of the property for an entire century, being an case with respect to the matter of the validity of the resolutory condition in unreasonable emasculation and denial of an integral attribute of question. ownership, should be declared as an illegal or impossible condition within the contemplation of Article 727 of the Civil Code. Consequently, as WHEREFORE, the judgment of respondent court is SET ASIDE and another specifically stated in said statutory provision, such condition shall be judgment is hereby rendered DISMISSING Civil Case No. 095-84 of the considered as not imposed. No reliance may accordingly be placed on said Regional Trial Court, Branch XX, Imus, Cavite. prohibitory paragraph in the deed of donation. The net result is that, absent said proscription, the deed of sale supposedly constitutive of the SO ORDERED. 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 Melencio-Herrera and Paras, JJ., concur. respondents must fail. Padilla, J., took no part. 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 Sarmiento, J., is on leave. Court from passing upon and resolving the same. Republic of the Philippines 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 Supreme Court 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 Manila quo, which motion was sustained by the trial court and set aside by D E C I S I O N

THIRD DIVISION

GARCIA, J.:

EDGARDO D. DOLAR, G.R. No. 152663 Petitioner,

Via this petition for review on certiorari under Rule 45 of the Rules of Present: Court, petitioner Edgardo D. Dolar seeks the annulment and setting aside

of the Orders dated January 3, 2002[1] and March 5, 2002[2] of the - versus - Regional Trial Court at Iloilo City, Branch 38, in its consolidated Civil Cases PANGANIBAN, J., ChairmanNo. 98-033 and 00-140.

SANDOVAL-GUTIERREZ,

CORONA, BARANGAY LUBLUB (now P.D. Monfort North) of The facts: the Municipality of Dumangas, herein CARPIO-MORALES, and represented by its Punong Barangay, PEPITO DUA, PHILIPPINE LONG DISTANCE TELEPHONE GARCIA, JJ. COMPANY, DUMANGAS WATER DISTRICT, 4th ILOILO MOBILE GROUP, ILOILO PROVINCIAL Petitioner and Serafin Jaranilla were co-owners of a parcel of land POLICE, ILOILO REGIONAL TRIAL COURT, BRANCH 68, with an area of 4.6 hectares, identified as Lot No. 1, Pcs-06-000744 (Lot

No. 1, for brevity), situated in Brgy. Lublub, Municipality of Dumangas, Respondents. Promulgated: Iloilo. Said property forms part of Lots No. 4181 and 4183 of the Dumangas Cadastre.

On September 16, 1981, petitioner and Jaranilla donated Lot No. 1

to respondent Barangay Lublub, subject to the following conditions: November 18, 2005 x ------x

A.) That the area donated shall be for the (TCT) No. T-129837[4] by the Registry of Deeds of Iloilo covering the purpose of con[s]tructing building and/or establishing public plaza, sports complex, public market, health centers donated area. and the like for the use of the Barangay of Lublub … which area shall be hereinafter be known as DON VENANCIO

DOLAR PLAZA and shall be so designated in a proper landmark; Sometime in June 1989, petitioner executed another deed[5] donating B.) That the construction and development of the area above-described shall be initiated and completed to Brgy. Lublub, represented by its incumbent barangay captain, the very within five (5) years from the execution of this Deed of Donation and should the same be not made or completed same area he and Serafin Jaranilla had earlier donated to the same donee. then this Deed of Donation shall have no force and effect whatsoever and the ownership of the above-described The second deed of donation contained exactly the same conditions property will revert back to the DONORS including all or any unfinished improvement the DONEE might have placed expressly set forth in the first. or constructed.

C.) That . . . should the use of the area be converted to uses other than herein stipulated, then this DEED OF DONATION shall be deemed revoked and the Barangay Lublub’s peaceful possession of the donated area remained ownership shall revert back to the DONORS .… (Underscoring added)[3] undisturbed until mother Lots No. 4181 and 4183 were included in the

published list of tax delinquent properties for disposition. At the auction Then barangay captain Jose Militar accepted the donation in behalf of Brgy. sale that followed, petitioner emerged as the highest bidder and was, Lublub. accordingly, awarded the property.

Following the execution of the deed of donation, Brgy. Lublub On May 6, 1998, in the Regional Trial Court (RTC) at Iloilo City, immediately took possession of the donated property, which soon became petitioner filed against Brgy. Lublub a complaint for Quieting of Title and the site of several government office buildings and recreational facilities. Recovery of Possession With Damages involving the 4.6-hectare area he For what in hindsight is a typical case of complacency on the part of a had earlier donated. Basically, petitioner claimed that the donation in government unit, respondent barangay did not have the donation question had ceased to be effective, the donee barangay having failed to registered under its name. On April 12, 1989, or almost eight (8) years comply with the conditions of the donation. Impleaded as co-defendants of from contract execution, petitioner was issued Transfer Certificate of Title Brgy. Lublub were entities each occupying a portion of the donated property, such as the Philippine Long Distance Company (PLDT), the 15. That the plaintiff, as exclusive, absolute, and registered owner of the property in question is entitled to Dumangas Water District, Branch 86 of RTC-Iloilo and the Iloilo Provincial the possession of the same.[6]

Police. Docketed in the trial court as Civil Case No. 98-033, the complaint alleged, inter alia, as follows: In its Answer With Counterclaim,[7] Brgy. Lublub, after traversing the material allegations of the complaint, alleged the following as affirmative

defenses:

10. That ... defendant [barangay] failed to build or establish within the period therein stipulated, a public plaza, sports complex … and like structures for the use of Barangay Lublub and neither had it designated in a proper 3.2. The said donation was made and accepted landmark that the area donated is known as the ‘Don on the same public instrument duly notarized by notary Venancio Dolar Plaza’ public Nicolas P. Sonalan xxx

11. That … defendant barangay allowed the use 3.3. The acceptance of donation was made by of the area donated to be converted to uses other than then Barangay Captain of Barangay Lublub Jose Militar with those provided in the donation documents when it allowed authority from the barangay council; entities like defendants PLDT, Dumangas Water District, PNP Mobile Force, and Branch 68 of the RTC of Iloilo, to 3.4. After the said deed of donation was executed construct buildings and occupy portions of the lot in in compliance with the conditions set forth in the deed of question . . .; donation and within five (5) years from its execution thereof several structures/buildings were constructed 12. That because of the failure of defendant thereon for the use and benefit of Brgy. Lublub, Dumangas, barangay to declare the lot in question in its name for Iloilo. ….; taxation purposes, the same was sold at public auction for non-payment of real property taxes . . . . 3.5. Later on . . . (PLDT) was invited to construct an office building on subject property for the benefit and 13. That in the light of the terms and conditions use of the residents of Barangay Lublub, Dumangas, Iloilo; in the Deeds of Donation and actuations of the defendant barangay in relation to the property donated; the 3.6. Likewise for the use and benefit of the donation . . . has automatically lost its force and effect barangay residents an office building of Dumangas Water whatsoever and the ownership of the property has reverted District was constructed . . .; to the plaintiff or the donation has been deemed automatically revoked . . .; 3.7. Likewise … a PNP Mobile Force was put up on the said place and a PNP office, in line with this, was 14 . That the act of defendant barangay in constructed . . .; allowing the construction of buildings by public and private entities on the donated property and holding offices 3.8. Likewise because of the desire of the therein has cast a doubt or cloud on the title of the plaintiff barangay residents to make the subject property a plaza over the property in litigation . . . . and a center place for their needs, Branch 68 of the RTC of Iloilo was established thereon. All these for the use and benefit of Barangay Lublub, now P.D. Monfort North, . . . .

On top of its Answer with Counterclaim, Brgy. Lublub, this time renamed and known as Brgy. P.D. Monfort North, filed with the same And, as grounds for its motion to dismiss embodied in the same answer, branch of the court a complaint for Cancellation of Title, Brgy. Lublub raised the matter of lack of cause of action or prescription of Reconveyance/Issuance of Title, Declaration of Nullity of Notice of the cause of action, if any, thus: Delinquency in the Payment of Real Property Tax.[8] Named as defendants

were petitioner and his wife, certain municipal officials of Dumangas and the Provincial Treasurer and Register of Deeds of Iloilo. In its complaint, 4.3 Plaintiff proceeded with his docketed as Civil Case No. 00-140, the plaintiff barangay averred having complaint . . . without first seeking the revocation of conducted an investigation which led to the discovery that the spouses the deed of donation in a proper court . . . as provided for under Article 764 of the New Civil Code; Dolar, colluding with some local officials, engineered the whole levy process which culminated in the auction sale of what is now a very 4.4 What plaintiff did was to unilaterally revoke the deed of donation … and valuable donated property. proceeded with the filing of this case with the assumption that the deed of donation was already validly revoked. xxx.

xxx xxx xx To Brgy. Lublub’s complaint, petitioner interposed a Motion to Dismiss[9] on grounds of forum shopping and litis pendentia, obviously on 4.6 It must be noted that the deed of donation was executed in September 16, 1981. Even if the account of the pendency of Civil Case No. 98-033. donee . . . failed to comply with the conditions of the deed within 5 years or until 1986, plaintiff

should have sought revocation of the donation within 4 years from 1986 or until 1990 only. xxx xxx; Eventually, the two (2) cases, Civil Cases No. 98-033 and 00-140, wherein the respective principal defendants have each interposed a 4.7 The deed of donation having been executed in 1981 yet, the donee . . . took possession of the motion to dismiss, were consolidated. same in concept of an owner, with just title, adverse, open, peaceful and continuously up to the present. Hence, even if the donation is void or conditions were not complied with, the property is now owned by the donee, … as it can be In the herein assailed Order dated January 3, 2002,[10] the trial considered that it has been acquired by court, on the finding that petitioner’s action was already barred by prescription. extinctive prescription under Article 764,[11] in relation to Articles 733[12] and 1144 (1)[13] of the Civil Code, granted the Barangay’s motion to dismiss in Civil Case No. 98-033 and denied petitioner’s similar motion in Based on the foregoing conditions, . . . should the barangay donee fails (sic) to comply therewith, the donor Civil Case No. 00-140, to wit: had the right to bring action to revoke the donation (Art. 764, supra) within a period of ten (10) years after the 5- year period of non-compliance with the conditions in the deed of donation (Art. 733, supra, in relation to Art. 1144(1), supra). Since the deed of donation was executed WHEREFORE, in view of all the foregoing, this Court on September 16, 1981, the 5-year period lapsed in 1986; resolved, as it hereby resolves, the pending incidents in consequently, the action to revoke should have been these two cases, to wit: brought not later than 1996, however, it appears that Civil Case No. 98-033 was filed by plaintiff Dolar on May 6, 1. Defendant Barangay 1998. Lublub’s built-in Motion to Dismiss/Affirmative Defenses raised in its Obviously, since the petitory portion of his Answer in Civil Case No. 98-033, being complaint in Civil Case No. 98-033 seeks for quieting of his impressed with merit, is granted; title over the subject property and seeks judgment consequently, said Civil Case No. 98-033 … declaring him to be the absolute owner thereof, plaintiff is hereby ordered dismissed; Dolar also seeks the revocation of the subject deed of donation. xxx.. 2. Defendants-spouses Edgardo D. Dolar’s and Corazon Yap’s Motion to xxx. Accordingly, in the light of the foregoing Dismiss in Civil Case No. 00-140, being jurisprudence, the action to revoke donation was to have without merit, the same is herby denied. been filed within ten (10) years from the time the action accrued, i.e., from the time of the non-compliance of the With this disposition, this Court shall proceed conditions …. hearing Civil Case No. 00-140 entitled Barangay P.D. Monfort North, Dumangas Iloilo, etc. vs. Municipality of Dumangas, Iloilo, et al.

SO ORDERED. In yet another Order dated March 5, 2002,[14] same court

denied petitioner’s motion for reconsideration.

Explains the trial court in its impugned Order of January 3, 2002: Therefrom, petitioner directly comes to the Court on pure questions of law, submitting issues which may be formulated in the following wise:

Stress should be made that the Deed of Donation executed by Edgardo D. Dolar (plaintiff in Civil Case No. 98- 033) in favor of Barangay Lublub xxx clearly imposes the following conditions: 1. Whether or not his action is one for revocation of donation instead of for quieting of xxx xxx xxx title; whether or not the action for quieting has prescribed. these provisions empower the punong barangay to enter into contracts for 2. Whether or not the deed of donation in the barangay upon authorization of the Sangguniang Barangay, or, in the question is (a) valid for defective acceptance and/or (b) no longer effective by reason of the alternative, the Sanggunian may authorize the barangay head to enter automatic reversion clause therein. into contracts for the barangay.

3. Whether or not respondent barangay had acquired the property in question by acquisitive prescription.

Excepting, however, respondent barangay alleged that then

barangay captain Jose Militar accepted the donation “in the same Deed of The petition lacks merit. Donation per authority granted by the barangay council.”[18]

It bears stressing that petitioner, at the outset, predicated his action The question then of whether Militar was clothed with authority to to quiet title on the ground of ineffectiveness of the donation, albeit he accept the donation for respondent barangay stands as disputed. Since would later add the matter of its invalidity. Indeed, the make or break issue the present recourse is interposed on pure questions of law, we need not to be resolved and to which all others must yield turns on the validity resolve the factual issue regarding Militar’s authority, or lack of it, to and/or continued efficacy of the subject donation. Valid and effective, the accept the donation in behalf of respondent barangay. It should be donation virtually forecloses any claim which petitioner may have over the pointed out, nevertheless, that petitioner is hardly the proper party to donated property against the donee and other occupants thereof, and his challenge the validity of the donation – which is presumed to be valid - on action to quiet title is virtually doomed to fail. Invalid and ineffective, the ground he presently invokes. The honor to question Militar’s ultra vires however, the arena is left open for petitioner to recover ownership and act, if this be the case, belongs to the Sanggunian of Barangay P.D. possession of the donated property and have the cloud on his title thereto, Monfort North. And more to the point, even assuming ex gratia argumenti if any there be, removed. petitioner’s legal standing to raise such a question, the final answer would still lean towards the validity of the donation. For, from the allegations of all the parties, it would appear that, through the years, the Sanggunian of

According to petitioner, the subject donation is, by force of Article Lublub as well as all the succeeding Sangunians of P.D. Monfort North 745[15] of the Civil Code, void, the accepting barangay captain being neither repudiated the acceptance of the donation by Militar nor acted in a without sufficient authority for the purpose. On this point, petitioner cites manner reflective of their opposition to the donation. On the contrary, the Section 88 of Batas Pambansa Blg. 337[16] - the law then in force - and respondent barangay has been enjoying the material and public-service Sections 91 and 389 the Local Government Code of 1991[17]. In gist, benefits arising from the infrastructures projects put up on the subject property. In a very real sense, therefore, the Sangguniang Barangay and the good people of P.D. Monfort North, by availing themselves of such De Luna and Archbishop of Manila are, to be sure, apropos. However, benefits for more than two decades now, effectively ratified Militar’s petitioner’s argument to support his thesis on the automatic rescission of acceptance of the donation. the donation in question and the consequent reversion of the property to the donor is an incomplete presentation of the Court’s pronouncements on

the point. This brings us to the question of the efficaciousness of the donation. Petitioner asserts that the 1981 and 1989 deeds of donation, pursuant to the uniform automatic rescission/reversion clauses therein, ceased to be We shall explain. effective upon respondent’s failure to meet the conditions for which it was charged to fulfill. To petitioner, the automatic rescission/reversion clause works, in appropriate instances, to revoke the donation and revert the ownership of the donated property to the donor without the need of judicial If the corresponding contract of donation expressly provides for intervention. In support of this argument, petitioner cites De Luna vs. automatic rescission and/or reversion in case of breach of the condition Abrigo[19] wherein this Court put to rest any lingering doubt as to the therein, and the donee violates or fails to comply with the condition, the validity of a stipulation providing for the automatic reversion of the donated property reverts back automatically to the donor. Such provision, donated property to the donor upon non-compliance by the donee of the De Luna teaches, is in the nature of an agreement granting a party the conditions or charges incumbent upon him. right to rescind a contract 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. Where, however, the Cited likewise is the subsequent complementary holding in Roman donee denies, as here, the rescission or challenges the propriety thereof, Catholic Archbishop of Manila vs. Court of Appeals[20], thus: then only the final award of the court can, to borrow from University of the Philippines vs. de los Angeles,[21] “conclusively settle whether the

resolution is proper or not.” Or, in the language of Catholic Archbishop of Although it is true that under Article 764 of the Civil Manila:[22] 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 The rationale for the foregoing is that in contracts donated in case of violation of the condition therein, hence providing for automatic revocation, judicial intervention is a judicial declaration revoking the same is not necessary. necessary not for purposes of obtaining a judicial declaration rescinding a contract already deemed rescinded by virtue of an agreement providing for revoke donation under Article 764 of the Code which, insofar as pertinent, rescission even without judicial intervention, but in order to reads as follows: determine whether or not the rescission was proper.

When a deed of donation, . . . expressly provides for automatic revocation and reversion of the property donated, the rules on contract and the general rules on Article 764. The donation shall be revoked at the prescription should apply, and not Article 764 of the Civil instance of the donor, when the donee fails to comply with Code. Since Article 1306 of said Code authorizes the any of the conditions which the former imposed upon the parties to a contract to establish such stipulations, . . . not latter. contrary to law, . . . public order or public policy, we are of the opinion that, at the very least, that stipulation of the xxx xxx xxx. parties providing for automatic revocation of the deed of donation, without prior judicial action for that purpose, is This action shall prescribe after four years from the valid subject to the determination of the propriety of the noncompliance with the condition, may be transmitted to rescission sought. Where such propriety is sustained, the the heirs of the donor, and may be exercised against the decision of the court will be merely declaratory of the donee's heirs. (Underscoring added) revocation, but it is not in itself the revocatory act.

Petitioner’s posture does not persuade. In the case at bench, it cannot be gainsaid that respondent barangay denied or challenged the purported revocation of the donation. In fact, the denial or challenge is embodied in respondent barangay’s complaint in Civil Case No. 00-140 and in its Answer cum motion to dismiss in Civil As aptly observed by the trial court, the petitory portion of Case 98-033, which similarly prayed for, among other things, the petitioner’s complaint in Civil Case No. 98-033 seeks for a judgment cancellation of petitioner's title on the subject property. declaring him the absolute owner of the donated property, a plea which necessarily includes the revocation of the deed of donation in question. Verily, a declaration of petitioner’ absolute ownership appears legally possible only when the deed of donation is contextually declared The foregoing discussion veritably disposes of the second formulated peremptorily revoked. issue.

Owing to the prescriptive component of Article 764 of the Civil Code, Now back to the first issue. It is petitioner’s posture that his action in petitioner’s dread of the invocation and application of said provision is at Civil Case No. 98-033 is one for quieting of title under Article 476[23] of once apparent as it is understandable. For, an action to revoke thereunder the Civil Code, not, as erroneously regarded by the trial court, an action to prescribes after four (4) years from non-compliance by the donee with any of the conditions set forth in the deed of donation. A little less than donation, five (5) years from the execution of the conveying deed in seventeen (17) years separate September 16, 1981, when the Deed of September 1981, or up September 1986, within which to introduce and Donation was executed, from May 6, 1998, when petitioner filed his complete the contemplated development of the donated area. Following complaint in Civil Case No. 98-033. Seventeen (17) years is, in turn, too far Article 764 of the Civil Code, petitioner had four (4) years from September removed, as shall be illustrated shortly, from the 4-year prescriptive period 1986, or up to September 1990, within which to seek the revocation of the referred to in Article 764 or even from the 10-year period under Article subject donation on the ground of breach of contract. 1144.[24]

The Court can grant that the prescription of actions for the revocation It cannot be overemphasized that respondent barangay traces its of onerous donations, as here, are governed by the general rules on claim of ownership over the disputed property to a valid contract of prescription,[26] which, in context, is Article 1144 of the Civil Code donation which is yet to be effectively revoked. Such rightful claim does providing that actions upon a written contract shall be brought within ten not constitute a cloud on the supposed title of petitioner over the same (10) years from accrual of the right of action. Ten years from September property removable by an action to quiet title. Withal, the remedy afforded 1986 – the date when petitioner’s right to revoke accrued - would be in Article 476 of the Civil Code is unavailing until the donation shall have September 1996. Here, however, what partakes as petitioner’s suit to first been revoked in due course under Article 764 or Article 1144 of the revoke was filed only in May 1998. Code.

In all, petitioner’s right of action to revoke or cancel the donation had Lest it be overlooked, the rule on the imprescriptibility of actions to indeed prescribed, regardless of whether the applicable legal provision is quiet title admits of exceptions. The trial court correctly mentioned one, Article 764 or the favorable Article 1144 of the Civil Code. It should be referring to a situation where the plaintiff in an action to quiet title is not in stated in this regard, however, that respondent barangay had disputed the actual possession of the land.[25] In the case at bench, petitioner is not in existence of the grounds upon which petitioner anchored his right to possession of the property. For sure, he is even asking in his complaint in revoke, claiming it had already complied with the construction and Civil Case No. 98-033 for recovery of possession of the donated property. development conditions of the donation. From the records, it would appear that respondent barangay’s boast of compliance is not an empty one. As we see it, the establishment on the donated area of telephone service, a

Given the above disquisition, petitioner can hardly fault the trial court water service, a police mobile force, and a courtroom, all for the benefits of for its holding that petitioner’s action to revoke is time-barred. As may be the barangay residents, substantially satisfies the terms and conditions of recalled, respondent barangay had, under the terms of the deed of the subject donation. The concrete paving of roads and the construction of government offices, sports complex for public enjoyment and like infrastructures which, per respondent barangay’s estimate, cost not less than P25 Million,[27] add persuasive dimension to the conclusion just made. With the view we take of the case, the execution of the 1989 deed of donation is really of little moment in terms of furthering petitioner’s cause. For, at that time, the property subject of this recourse was no longer his to donate, having earlier relinquished his ownership thereon. Petitioner's long silence vis-à-vis the kind of development structures Nemo dat qui non habet – No one can give what he has not.[29] Stated a that Barangay Lublub had decided to put up or allowed to be established bit differently, respondent barangay’s right over the donated area on the subject area cannot but be taken as an indicia of his satisfaction proceeds from the 1981 donation. The legal effects, therefore, of its action with respondent barangay’s choice of public service projects. The or inaction respecting the donated property should be assayed on the basis prolonged silence was broken only after the provincial and municipal of the 1981 donation. governments advertised, then sold the property in a public auction to satisfy questionable tax liabilities.

The last issue raised pivots on whether or not respondent barangay can acquire the subject property by acquisitive prescription, the Much is made by petitioner about his execution of the 1989 deed of petitioner’s thesis being that prescription does not run against registered donation, which, to him, should be utilized as a point of reference in land.[30] determining the prescriptive period[28] defined under either Article 764 or 1144 of the Civil Code. He states:

Petitioner’s point is theoretically correct and may perhaps tip the xxx It has not been explained up to this juncture why the Deed of Donation of June 1989 … is not being balance in his favor, but for the fact that the respondent barangay mentioned or considered when it is alleged in the anchors its title and right over the donated lot, first and foremost, complaint. As will be noted in the Deed of Donation dated 1981 the property was jointly owned by plaintiff Dolar and by virtue of the deed of donation. Admittedly, standing alone, adverse, Jarantilla, with separate title; in Annex “B”, the Donation of continuous and long possession of a piece of real property cannot 1989 only plaintiff Dolar signed the same as the only registered owne[r] of the lot donated; xxx. As previously defeat the title of a registered owner. But, then, this postulate adverted to, the prescriptive period for violation or presupposes a Torrens title lawfully acquired and issued. As may be contravention of the terms and conditions of Annex “B” should be reckoned from 1994 and therefore this action recalled, however, respondent barangay instituted Civil Case No. 00- filed in 1998 is within the period. 140, supra, for Cancellation of Title, Reconveyance/Issuance of Title precisely because of the dubious manner by which petitioner allegedly acquired his TCT No. T-129837 over a lot he admits donating.

SO ORDERED.

Parenthetically, petitioner’s contention that the donation was invalid SECOND DIVISION because it was not registered in the Registry of Property deserves no merit. For, as between the parties to the donation and their assigns, the [G.R. No. 106755. February 1, 2002] registration of the deed of donation with the Registry of Deeds is not APOLINARIA AUSTRIA-MAGAT, petitioner, vs. HON. COURT OF APPEALS and needed for its validity and efficacy. In Pajarillo vs. Intermediate Appellate FLORENTINO LUMUBOS, DOMINGO COMIA, TEODORA CARAMPOT, ERNESTO Court,[31] the Court emphatically dismissed the notion that registration APOLO, SEGUNDA SUMPELO, MAMERTO SUMPELO and RICARDO SUMPELO, respondents. was necessary to make the donation a binding commitment insofar as the donor and the donee were concerned. D E C I S I O N

DE LEON, JR., J.:

Before us is a petition for review of the Decision of the Court of Appeals, As a final consideration, let it be made clear that this opinion dated June 30, 1989 reversing the Decision, dated August 15, 1986 of the merely resolves the question of the correctness of the dismissal by the trial Regional Trial Court (RTC) of Cavite, Branch 17. The Decision of the RTC dismissed Civil Case No. 4426 which is an action for annulment of title, court of Civil Case No. 98-033 on the basis of facts attendant thereto in reconveyance and damages. the light of applicable laws and jurisprudence. It is not meant to prejudge The facts of the case are as follows: the outcome of Civil Case No. 00-140 which, while related to Civil Case

No. 98-033, tenders different issues, foremost of which is the validity of a Basilisa Comerciante is a mother of five (5) children, namely, Rosario Torrens title issued over a piece of land to one who had previously donated Austria, Consolacion Austria, herein petitioner Apolinaria Austria-Magat, Leonardo, and one of herein respondents, Florentino Lumubos. Leonardo the same. died in a Japanese concentration camp at Tarlac during World War II.

In 1953, Basilisa bought a parcel of residential land together with the improvement thereon covered and described in Transfer Certificate of Title No. RT-4036 (T-3268) and known as Lot 1, Block 1, Cavite Beach

Subdivision, with an area of 150 square meters, located in Bagong Pook, San Antonio, Cavite City. WHEREFORE, the petition is DENIED for lack of merit. On December 17, 1975, Basilisa executed a document designated as “Kasulatan sa Kaloobpala (Donation)”. The said document which was notarized by Atty. Carlos Viniegra, reads as follows: Costs against petitioner. KASULATANG SA KALOOBPALA (DONATION) At kaming apat na anak na nakalagda o nakadiit sa kasulatang ito ay TINATANGGAP NAMIN ang kaloob-palang ito ng aming magulang na si TALASTASIN NG LAHAT AT SINUMAN: Basilisa Comerciante, at tuloy pinasasalamatan namin siya ng taos sa (sic) puso dahil sa kagandahan look (sic) niyang ito sa amin. Na ako, si BASELISA COMERCIANTE, may sapat na gulang, Filipina, balo, at naninirahan sa blg. 809 L. Javier Bagong Pook, San Antonio, Lungsod ng SA KATUNAYAN, ay nilagdaan o diniitan namin ito sa Nobeleta, Kabite, Kabite, Filipinas, sa pamamagitan ng kasulatang ito’y ngayong ika-17 ng Disyembre taong 1975.

NAGSASALAYSAY HER MARK HER MARK

Na alang-alang sa mabuting paglilingkod at pagtingin na iniukol sa akin ng BASELISA COMERCIANTE ROSARIO AUSTRIA apat kong mga tunay na anak na sila: Tagakaloobpala ROSARIO AUSTRIA, Filipina, may sapat na gulang, balo, naninirahan sa 809 L. Javier, Bagong Pook, San Antonio, Lungsod ng Kabite; (Sgd.) APOLINARIA AUSTRIA HER MARK

CONSOLACION AUSTRIA, Filipina, may sapat na gulang, balo naninirahan Tagatanggap-pala CONSOLACION AUSTRIA sa 809 L. Javier, Bagong Pook, San Antonio, Lungsod ng Kabite; (Sgd.)FLORENTINO LUMUBOS APOLINARIA AUSTRIA, Filipina, may sapat na gulang, may asawa, naninirahan sa Pasong Kawayan, Hen. Trias, Kabite; Tagatanggap-pala

FLORENTINO LUMUBOS, Filipino, may sapat na gulang, asawa ni (Acknowledgment signed by Notary Public C.T. Viniegra is omitted). Encarnacion Magsino, at naninirahan din sa 809 L. Javier, Bagong Pook, San Antonio, Lungsod ng Kabite; ay Basilisa and her said children likewise executed another notarized document denominated as “Kasulatan” which is attached to the deed of Kusang loob na ibinibigay ko at ipinagkakaloob ng ganap at hindi na donation. The said document states that: mababawi sa naulit ng apat na anak ko at sa kanilang mga tagamagmana (sic), ang aking isang lupang residential o tirahan sampu ng aking bahay KASULATAN nahan ng nakatirik doon na nasa Bagong Pook din, San Antonio, Lungsod ng Kabite, at nakikilala bilang Lote no. 7, Block no.1, of Subdivision Plan Psd-12247; known as Cavite Beach Subdivision, being a portion of Lot No. TALASTASIN NG MADLA: 1055, of the Cadastral survey of Cavite, GLRO Cadastral Rec. no. 9539; may sukat na 150 metros cuadrados, at nakatala sa pangalan ko sa Titulo Na kaming mga nakalagda o nakadiit sa labak nito – sila Basilisa Torrens bilang TCT-T-3268 (RT-4036) ng Lungsod ng Kabite; Comerciante at ang kanyang mga anak na sila:

Na ang Kaloob palang ito ay magkakabisa lamang simula sa araw na ako’y Rosario Austria, Consolacion Austria, Apolonio Austria, at Florentino pumanaw sa mundo, at sa ilalim ng kondision na: Lumubos, pawang may mga sapat na gulang, na lumagda o dumiit sa kasulatang kaloob pala, na sinangayunan namin sa harap ng Notario Magbubuhat o babawasin sa halaga ng nasabing lupa at bahay ang Publico, Carlos T. Viniegra, ay nagpapahayag ng sumusunod: anumang magugul o gastos sa aking libing at nicho at ang anumang matitira ay hahatiin ng APAT na parte, parepareho isang parte sa bawat Na ang titulo numero TCT-T-2260 (RT-4036) ng Lungsod ng Kabite, bahay anak kong nasasabi sa itaas nito upang maliwanang (sic) at walang sa loteng tirahan ng Bagong Pook na nababanggit sa nasabing kasulatan, makakalamang sinoman sa kanila; ay mananatili sa poder o possession ng Ina, na si Basilisa Comerciante whatsoever. Hence, the sale by the donor of the said property was valid habang siya ay nabubuhay at since she remained to be the absolute owner thereof during the time of the said transaction. Gayon din ang nasabing Titulo ay hindi mapapasangla o maipagbibili ang lupa habang maybuhay ang nasabing Basilisa Comerciante. On appeal, the decision of the trial court was reversed by the Court of Appeals in its subject decision, the dispositive portion of which reads, to Sa katunayan ang nagsilagda kaming lahat sa labak nito sa harap ng wit: abogado Carlos T. Viniegra at dalawang saksi. WHEREFORE, in view of the foregoing, the appealed decision is hereby SET Nobeleta, Kabite. Ika-17 ng Disyembre, 1975. ASIDE and a new one rendered:

On February 6, 1979, Basilisa executed a Deed of Absolute Sale of the 1. declaring null and void the Deed of Sale of Registered Land (Annex B) subject house and lot in favor of herein petitioner Apolinaria Austria-Magat and Transfer Certificate of Title No. T-10434 of the Registry of Deeds of for Five Thousand Pesos (P5,000.00). As the result of the registration of Cavite City (Annex E) and ordering the cancellation thereof; and that sale, Transfer Certificate of Title (TCT for brevity) No. RT-4036 in the name of the donor was cancelled and in lieu thereof TCT No. T-10434 was 2. declaring appellants and appellee co-owners of the house and lot in issued by the Register of Deeds of Cavite City in favor of petitioner question in accordance with the deed of donation executed by Basilisa Apolinaria Austria-Magat on February 8, 1979. Comerciante on December 17, 1975.

On September 21, 1983, herein respondents Teodora Carampot, Domingo No pronouncement as to costs. Comia, and Ernesto Apolo (representing their deceased mother Consolacion Austria), Ricardo, Mamerto and Segunda, all surnamed SO ORDERED. Sumpelo (representing their deceased mother Rosario Austria) and Florentino Lumubos filed before the Regional Trial Court of Cavite an The appellate court declared in its decision that: action, docketed as Civil Case No. 4426 against the petitioner for annulment of TCT No. T-10434 and other relevant documents, and for reconveyance and damages. In the case at bar, the decisive proof that the deed is a donation inter vivos is in the provision that : On August 15,1986, the trial court dismissed Civil Case No. 4426 per its Decision, the dispositive portion of which reads: Ibinibigay ko at ipinagkakaloob ng ganap at hindi mababawi sa naulit na apat na anak ko at sa kanilang mga tagapagmana, ang aking lupang residential o tirahan sampu WHEREFORE, in view of the foregoing, this Court hereby renders judgment ng aking bahay nakatirik doon xxx. (emphasis supplied) for defendant dismissing this case and ordering plaintiffs to pay the amount of P3,000.00 as attorney’s fees and the costs of suit. This is a clear expression of the irrevocability of the conveyance. The irrevocability of the donation is a characteristic of a donation inter vivos. SO ORDERED. By the words “hindi mababawi”, the donor expressly renounced the right to freely dispose of the house and lot in question. The right to dispose of a According to the trial court, the donation is a donation mortis causa property is a right essential to full ownership. Hence, ownership of the pursuant to Article 728 of the New Civil Code inasmuch as the same house and lot was already with the donees even during the donor’s expressly provides that it would take effect upon the death of the donor; lifetime. xxx that the provision stating that the donor reserved the right to revoke the donation is a feature of a donation mortis causa which must comply with xxx the formalities of a will; and that inasmuch as the donation did not follow xxx xxx the formalities pertaining to wills, the same is void and produced no effect In the attached document to the deed of donation, the donor and her The provisions in the subject deed of donation that are crucial for the children stipulated that: determination of the class to which the donation belongs are, as follows:

Gayon din ang nasabing titulo ay hindi mapapasangla o maipagbibili ang xxx lupa habang may buhay ang nasabing Basilisa Comerciante.” xxx xxx

The stipulation is a reiteration of the irrevocability of the dispossession on xxx(I)binibigay ko at ipinagkakaloob ng ganap at hindi mababawi sa the part of the donor. On the other hand, the prohibition to encumber, naulit na apat na anak ko at sa kanilang mga tagapagmana, ang alienate or sell the property during the lifetime of the donor is a aking lupang residential o tirahan sampu ng aking bahay nakatirik recognition of the ownership over the house and lot in issue of the donees doon na nasa Bagong Pook din, San Antonio, Lungsod ng Kabite for only in the concept of an owner can one encumber or dispose a property. xxx xxx xxx Hence this appeal grounded on the following assignment of errors: Na ang Kaloob palang ito ay magkakabisa lamang simula sa araw na ako’y I pumanaw sa mundo, xxx.

THE RESPONDENT COURT OF APPEALS, WITH DUE RESPECT, xxx IGNORED THE RULES OF INTERPRETATION OF CONTRACTS WHEN xxx xxx IT CONSIDERED THE DONATION IN QUESTION AS INTER VIVOS. Na ang titulo numero TCT-T-2260 (RT-4036) ng Lungsod ng Kabite, II bahay sa loteng tirahan ng Bagong Pook na nababanggit sa nasabing kasulatan, ay mananatili sa poder o possesion ng Ina, na si Basilisa THE RESPONDENT COURT OF APPEALS, AGAIN WITH DUE Comerciante habang siya ay nabubuhay at RESPECT, ERRED IN NOT HOLDING THAT THE PRESENT ACTION HAS PRESCRIBED UNDER THE STATUTE OF LIMITATIONS. Gayon din ang nasabing Titulo ay hindi mapapasangla o maipagbibili ang lupa habang maybuhay ang nasabing Basilisa Anent the first assignment of error, the petitioner argues that the Court of Comerciante xxx. Appeals erred in ruling that the donation was a donation inter vivos. She claims that in interpreting a document, the other relevant provisions It has been held that whether the donation is inter vivos or mortis causa therein must be read in conjunction with the rest. While the document depends on whether the donor intended to transfer ownership over the indeed stated that the donation was irrevocable, that must be interpreted properties upon the execution of the deed. In Bonsato v. Court of Appeals, in the light of the provisions providing that the donation cannot be this Court enumerated the characteristics of a donation mortis causa, to encumbered, alienated or sold by anyone, that the property donated shall wit: remain in the possession of the donor while she is alive, and that the donation shall take effect only when she dies. Also, the petitioner claims (1) It conveys no title or ownership to the transferee before the that the donation is mortis causa for the reason that the contemporaneous death of the transferor; or, what amounts to the same thing, that the and subsequent acts of the donor, Basilisa Comerciante, showed such transferor should retain the ownership (full or naked) and control of the intention. Petitioner cites the testimony of Atty. Viniegra, who notarized property while alive; the deed of donation, that it was the intent of the donor to maintain control over the property while she was alive; that such intent was shown when (2) That before his death, the transfer should be revocable by the she actually sold the lot to herein petitioner. transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties We affirm the appellate court’s decision. conveyed; (3) That the transfer should be void if the transferor should survive that the donated property will remain in the possession of the donor just the transferee. goes to show that the donor has given up his naked title of ownership thereto and has maintained only the right to use (jus utendi) and possess Significant to the resolution of this issue is the irrevocable character of the (jus possidendi) the subject donated property. donation in the case at bar. In Cuevas v. Cuevas, we ruled that when the deed of donation provides that the donor will not dispose or take away the Thus, we arrive at no other conclusion in that the petitioner’s cited property donated (thus making the donation irrevocable), he in effect is provisions are only necessary assurances that during the donor’s lifetime, making a donation inter vivos. He parts away with his naked title but the latter would still enjoy the right of possession over the property; but, maintains beneficial ownership while he lives. It remains to be a donation his naked title of ownership has been passed on to the donees; and that inter vivos despite an express provision that the donor continues to be in upon the donor’s death, the donees would get all the rights of ownership possession and enjoyment of the donated property while he is alive. In the over the same including the right to use and possess the same. Bonsato case, we held that: Furthermore, it also appeared that the provision in the deed of donation (W)hat is most significant [in determining the type of donation] is the regarding the prohibition to alienate the subject property is couched in absence of stipulation that the donor could revoke the donations; on the general terms such that even the donor is deemed included in the said contrary, the deeds expressly declare them to be “irrevocable”, a quality prohibition (“Gayon din ang nasabing Titulo ay hindi mapapasangla o absolutely incompatible with the idea of conveyances mortis causa where maipagbibili ang lupa habang maybuhay ang nasabing Basilisa revocability is of the essence of the act, to the extent that a testator can Comerciante”). Both the donor and the donees were prohibited from not lawfully waive or restrict his right of revocation (Old Civil Code, Art.737; alienating and encumbering the property during the lifetime of the donor. New Civil Code, Art. 828). If the donor intended to maintain full ownership over the said property until her death, she could have expressly stated therein a reservation of her Construing together the provisions of the deed of donation, we find and so right to dispose of the same. The prohibition on the donor to alienate the hold that in the case at bar the donation is inter vivos. The express said property during her lifetime is proof that naked ownership over the irrevocability of the same (“hindi na mababawi”) is the distinctive standard property has been transferred to the donees. It also supports the that identifies that document as a donation inter vivos. The other irrevocable nature of the donation considering that the donor has already provisions therein which seemingly make the donation mortis causa do not divested herself of the right to dispose of the donated property. On the go against the irrevocable character of the subject donation. According to other hand, the prohibition on the donees only meant that they may not the petitioner, the provisions which state that the same will only take mortgage or dispose the donated property while the donor enjoys and effect upon the death of the donor and that there is a prohibition to possesses the property during her lifetime. However, it is clear that the alienate, encumber, dispose, or sell the same, are proofs that the donation donees were already the owners of the subject property due to the is mortis causa. We disagree. The said provisions should be harmonized irrevocable character of the donation. with its express irrevocability. In Bonsato where the donation per the deed of donation would also take effect upon the death of the donor with The petitioner argues that the subsequent and contemporaneous acts of reservation for the donor to enjoy the fruits of the land, the Court held that the donor would show that her intention was to maintain control over her the said statements only mean that “after the donor’s death, the donation properties while she was still living. We disagree. Respondent Domingo will take effect so as to make the donees the absolute owners of the Comia testified that sometime in 1977 or prior to the sale of the subject donated property, free from all liens and encumbrances; for it must be house and lot, his grandmother, the donor in the case at bar, delivered the remembered that the donor reserved for himself a share of the fruits of the title of the said property to him; and that the act of the donor was a land donated.” manifestation that she was acknowledging the ownership of the donees over the property donated. Moreover, Atty. Viniegra testified that when the In Gestopa v. Court of Appeals, this Court held that the prohibition to donor sold the lot to the petitioner herein, she was not doing so in alienate does not necessarily defeat the inter vivos character of the accordance with the agreement and intent of the parties in the deed of donation. It even highlights the fact that what remains with the donor is donation; that she was disregarding the provision in the deed of donation the right of usufruct and not anymore the naked title of ownership over the prohibiting the alienation of the subject property; and that she knew that property donated. In the case at bar, the provision in the deed of donation the prohibition covers her as well as the donees. Another indication in the deed of donation that the donation is inter vivos registration was made on February 8, 1979 when TCT No. RT-4036 in the is the acceptance clause therein of the donees. We have ruled that an name of the donor was cancelled and in lieu thereof TCT No. T-10434 in acceptance clause is a mark that the donation is inter vivos. Acceptance the name of the petitioner was issued. Thus, more than four (4) years have is a requirement for donations inter vivos. On the other hand, donations passed since the sale of the subject real estate property was registered mortis causa, being in the form of a will, are not required to be accepted and the said new title thereto was issued to the petitioner. The petitioner by the donees during the donor’s lifetime. contends that an action for reconveyance of property on the ground of alleged fraud must be filed within four (4) years from the discovery of fraud We now rule on whether the donor validly revoked the donation when one which is from the date of registration of the deed of sale on February 8, of her daughters and donees, Consolacion Austria, violated the prohibition 1979; and that the same prescriptive period also applies to a suit to encumber the property. When Consolacion Austria mortgaged the predicated on a trust relationship that is rooted on fraud of breach of trust. subject property to a certain Baby Santos, the donor, Basilisa Comerciante, asked one of the respondents herein, Domingo Comia, to redeem the When one’s property is registered in another’s name without the former’s property, which the latter did. After the petitioner in turn redeemed the consent, an implied trust is created by law in favor of the true owner. property from respondent Domingo, the donor, Basilisa, sold the property Article 1144 of the New Civil Code provides: to the petitioner who is one of the donees. Art. 1144. The following actions must be brought within ten years from the The act of selling the subject property to the petitioner herein cannot be time the right of action accrues: considered as a valid act of revocation of the deed of donation for the reason that a formal case to revoke the donation must be filed pursuant to (1) Upon a written contract; Article 764 of the Civil Code which speaks of an action that has a prescriptive period of four (4) years from non-compliance with the (2) Upon an obligation created by law; condition stated in the deed of donation. The rule that there can be automatic revocation without benefit of a court action does not apply to the case at bar for the reason that the subject deed of donation is devoid (3) Upon a judgment. (n) of any provision providing for automatic revocation in event of non- compliance with the any of the conditions set forth therein. Thus, a court Thus, an action for reconveyance of the title to the rightful owner action is necessary to be filed within four (4) years from the non- prescribes in ten (10) years from the issuance of the title. It is only when compliance of the condition violated. As regards the ground of estoppel, fraud has been committed that the action will be barred after four (4) the donor, Basilisa, cannot invoke the violation of the provision on the years. prohibition to encumber the subject property as a basis to revoke the donation thereof inasmuch as she acknowledged the validity of the However, the four-year prescriptive period is not applicable to the case at mortgage executed by the donee, Consolacion Austria, when the said bar for the reason that there is no fraud in this case. The findings of fact of donor asked respondent Domingo Comia to redeem the same. Thereafter, the appellate court which are entitled to great respect, are devoid of any the donor, Basilisa likewise asked respondent Florentino Lumubos and the finding of fraud. The records do not show that the donor, Basilisa, and the petitioner herein to redeem the same. Those acts implied that the donees petitioner ever intended to defraud the respondents herein with respect to have the right of control and naked title of ownership over the property the sale and ownership of the said property. On the other hand, the sale considering that the donor, Basilisa condoned and acknowledged the was grounded upon their honest but erroneous interpretation of the deed validity of the mortgage executed by one of the donees, Consolacion of donation that it is mortis causa, not inter vivos; and that the donor still Austria. had the rights to sell or dispose of the donated property and to revoke the donation. Anent the second issue, the petitioner asserts that the action, against the petitioner, for annulment of TCT No. T-10434 and other relevant There being no fraud in the trust relationship between the donor and the documents, for reconveyance and damages, filed by the respondents on donees including the herein petitioner, the action for reconveyance September 21, 1983 on the ground of fraud and/or implied trust has prescribes in ten (10) years. Considering that TCT No. T-10434 in the already prescribed. The sale happened on February 6, 1979 and its name of the petitioner and covering the subject property was issued only on February 8, 1979, the filing of the complaint in the case at bar in 1983 was well within the ten-year prescriptive period.

The Court of Appeals, therefore, committed no reversible error in its appealed Decision.

WHEREFORE, the appealed Decision dated June 30, 1989 of the Court of Appeals is hereby AFFIRMED. No pronouncement as to costs.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.

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