ABELLANA vs. PONCE

FACTS: Felomina Abellana is the aunt of respondent Lucila Ponce; on 15 July 1981, Felomina bought a parcel of agricultural land which she intended to give to her niece, Lucila. Because of this, the deed of sale showed that it was Lucila who bought the land. However, Felomina remained in possession and developed the same land and continued paying real property taxes relative to it. Meanwhile the relationship of the aunt and niece turned sour, as the latter even threatened Felomina physically and has become disrespectful. Because of this development, Felomina filed a case for revocation of implied trust to recover the property and its legal title over it. On August 28, 2000, the trial court rendered a decision holding that an implied trust existed between Felomina and Lucila, such that the latter is merely holding the lot for the benefit of the former. It thus ordered the conveyance of the subject lot in favor of Felomina. On appeal, the Court reversed the lower court’s decision and said that Felomina wasn’t able to prove an implied trust.

HELD: The Supreme Court ruled that it was Felomina and not Lucila who truly owned the parcel of land. The lone testimony of Felomina is sufficient to prove her claim if it is credible. The presentation of the brother of the seller who witnessed Felomina as the real buyer and paid the purchase price, debunks the claim of Lucila. In the instant case, a donation of an immovable was effected NOT on a public instrument as required by law. Because it was only an oral donation, it is thus void. Unlike ordinary contracts (which are perfected by the concurrence of the requisites of consent, object and cause pursuant to Article 1318 of the Civil Code), solemn contracts like donations are perfected only upon compliance with the legal formalities under Articles 748 and 749. Otherwise stated, absent the solemnity requirements for validity, the mere intention of the parties does not give rise to a contract. Hence, Felomina can still recover title from Lucila. Dispensation of such solemnities would give rise to anomalous situations where the formalities of a donation and a will in donations inter vivos, and donations mortis causa, respectively, would be done away with when the transfer of the property is made in favor of a child or one to whom the donor stands in loco parentis. Such a scenario is clearly repugnant to the mandatory nature of the law on donation.

ABELLANA vs. PONCE YNARES-SANTIAGO, J.: This is a petition for review on certiorari assailing the June 16, 2003 decision[2] of the Court of Appeals in CA-G.R. CV No. 69213, which reversed and set aside the August 28, 2000 decision[3] of the Regional Trial Court of Butuan City, Branch 2, in Civil Case No. 4270. The facts as testified to by petitioner Felomina Abellana are as follows: On July 15, 1981, Felomina, a spinster, pharmacist and aunt of private respondent Lucila Ponce, purchased from the late Estela Caldoza-Pacres a 44,297[4] square meter agricultural lot[5] with the intention of giving said lot to her niece, Lucila. Thus, in the deed of sale,[6] the latter was designated as the buyer of Lot 3, Pcs-10-000198, covered by Original Certificate of Title No. P-27, Homestead Patent No. V-1551 and located at Los Angeles, Butuan City.[7] The total consideration of the sale was P16,500.00, but only P4,500.00 was stated in the deed upon the request of the seller.[8] Subsequently, Felomina applied for the issuance of title in the name of her niece. On April 28, 1992, Transfer Certificate of Title (TCT) No. 2874[9] over the subject lot was issued in the name of Lucila.[10] Said title, however, remained in the possession of Felomina who developed the lot through Juanario Torreon[11] and paid real property taxes thereon.[12] The relationship between Felomina and respondent spouses Romeo and Lucila Ponce, however, turned sour. The latter allegedly became disrespectful and ungrateful to the point of hurling her insults and even attempting to hurt her physically. Hence, Felomina filed the instant case for revocation of implied trust to recover legal title over the property.[13] Private respondent spouses Lucila, also a pharmacist, and Romeo, a marine engineer, on the other hand, claimed that the purchase price of the lot was only P4,500.00 and that it was them who paid the same. The payment and signing of the deed of sale allegedly took place in the office of Atty. Teodoro Emboy in the presence of the seller and her siblings namely, Aquilino Caldoza and the late Lilia Caldoza.[14]

A year later, Juanario approached Lucila and volunteered to till the lot, to which she agreed.[15] In 1987, the spouses consented to Felominas proposal to develop and lease the lot. They, however, shouldered the real property taxes on the lot, which was paid through Felomina. In 1990, the spouses demanded rental from Felomina but she refused to pay because her agricultural endeavor was allegedly not profitable.[16] When Lucila learned that a certificate of title in her name had already been issued, she confronted Felomina who claimed that she already gave her the title. Thinking that she might have misplaced the title, Lucila executed an affidavit of loss which led to the issuance of another certificate of title in her name.[17] On August 28, 2000, the trial court rendered a decision holding that an implied trust existed between Felomina and Lucila, such that the latter is merely holding the lot for the benefit of the former. It thus ordered the conveyance of the subject lot in favor of Felomina. The dispositive portion thereof, reads: IN VIEW OF THE FOREGOING, judgment is hereby rendered declaring, directing and ordering that: a) An implied trust was created with plaintiff as trustor and private defendant Lucila A. Ponce married to private defendant Engr. Romeo D. Ponce as trustee pursuant to Article 1448 of the New Civil Code;

b) The implied trust, having been created without the consent of the trustee and without any condition, is revoked;

c) The private defendants, who are spouses, execute the necessary deed of conveyance in favor of the plaintiff of the land, covered by and embraced in TCT NO. T-2874, in controversy and in the event private defendants refuse to execute the deed of conveyance, the public defendant City Register of Deeds of Butuan to cancel TCT No. T-2874 and issue a new one in lieu thereof in the name of the plaintiff;

d) The private defendants spouses to pay jointly and severally plaintiff the sum of PhP25,000.00 as attorneys fees and PhP4,000.00 as expenses of litigation;

e) The dismissal of the counterclaim of private defendants spouses[;] and

f) The private defendants to pay the costs. SO ORDERED.[18] Private respondent spouses appealed to the Court of Appeals which set aside the decision of the trial court ruling that Felomina failed to prove the existence of an implied trust and upheld respondent spouses ownership over the litigated lot. The appellate court further held that even assuming that Felomina paid the purchase price of the lot, the situation falls within the exception stated in Article 1448 of the Civil Code which raises a disputable presumption that the property was purchased by Felomina as a gift to Lucila whom she considered as her own daughter. The decretal portion thereof, states WHEREFORE, premises considered, the appealed decision of the Regional Trial Court, Branch 2, Butuan City, in Civil Case No. 4270, is hereby REVERSED AND SET ASIDE. A new one is heretofore rendered dismissing the complaint below of plaintiff-appellee, F[e]lomina Abellana.SO ORDERED.[19] Felomina filed a motion for reconsideration but the same was denied.[20] Hence, the instant petition. The issue before us is: Who, as between Felomina and respondent spouses, is the lawful owner of the controverted lot? To resolve this issue, it is necessary to determine who paid the purchase price of the lot. After a thorough examination of the records and transcript of stenographic notes, we find that it was Felomina and not Lucila who truly purchased the questioned lot from Estela. The positive and consistent testimony of Felomina alone, that she was the real vendee of the lot, is credible to debunk the contrary claim of respondent spouses. Indeed, the lone testimony of a witness, if credible, is sufficient as in the present case.[21] Moreover, Aquilino Caldoza, brother of the vendor and one of the witnesses[22] to the deed of sale, categorically declared that Felomina was the buyer and the one who paid the purchase price to her sister, Estela.[23]

Then too, Juanario, who was allegedly hired by Lucila to develop the lot, vehemently denied that he approached and convinced Lucila to let him till the land. According to Juanario, he had never spoken to Lucila about the lot and it was Felomina who recruited him to be the caretaker of the litigated property.[24] The fact that it was Felomina who bought the lot was further bolstered by her possession of the following documents from the time of their issuance up to the present, to wit: (1) the transfer certificate of title[25] and tax declaration in the name of Lucila;[26] (2) the receipts of real property taxes in the name of Felomina Abellana for the years 1982-1984, 1992-1994 and 1995;[27] and (3) the survey plan of the lot.[28] Having determined that it was Felomina who paid the purchase price of the subject lot, the next question to resolve is the nature of the transaction between her and Lucila. It appears that Felomina, being of advanced age[29] with no family of her own, used to purchase properties and afterwards give them to her nieces. In fact, aside from the lot she bought for Lucila (marked as Exhibit R-2), she also purchased 2 lots, one from Aquilino Caldoza (marked as Exhibit R-1) and the other from Domiciano Caldoza (marked as Exhibit R-3), which she gave to Zaida Bascones (sister of Lucila), thus: Q I am showing to you again Exhibit R, according to you[,] you bought Exhibits R-1, R-2 and R-3, do you remember that?A Yes sir. x x x x x x x x x Q Aquilin[o] Caldoza conveyed this land in Exhibit R-1 to you?A Yes, sir. Q Is this now titled in your name?A No. I was planning to give this land to my nieces. One of which [was] already given to Mrs. [Lucila] Ponce. Q I am talking only about this lot in Exhibit R-1[.]A Not in my name.

Q In whose name was this lot in Exhibit R-1 now?A In the name of Zaida Bascones. Q Who prepared the deed of sale?A At the start it was in the name of Rudy [Torreon].[30] Because Rudy [Torreon] knew that there is some trouble already about that lot he made a deed of sale to the name of Zaida Bascones, which I planned to give that land to her (sic). Q As regards Exhibit R-1, you bought it actually?A Yes, sir. Q But the original deed of sale was in the name of Rudolfo [Torreon]?A Yes, sir. Q And later on Rudolfo [Torreon] again transferred it to Zaida Bascones?A Yes, sir.[31] Likewise, in the case of Lucila, though it was Felomina who paid for the lot, she had Lucila designated in the deed as the vendee thereof and had the title of the lot issued in Lucilas name. It is clear therefore that Felomina donated the land to Lucila. This is evident from her declarations, viz: Witness A In 1981 there was a riceland offered so I told her that I will buy that land and I will give to her later (sic), because since 1981 up to 1992 Mrs. Lucila Ponce has no job. Q Where is the land located?A In Los Angeles, Butuan City. Q Who was the owner of this land?A The owner of that land is Mrs. Estela Caldoza-Pacr[e]s.The husband is Pacr[e]s. x x x x x x x x x Q What did you do with this land belonging to Mrs. Estela-Caldoza- Pacr[e]s?

A I paid the lot, then worked the lot, since at the start of my buying the lot until now (sic). Q You said that you told Lucila Ponce that you would give the land to her later on, what did you do in connection with this intention of yours to give the land to her?A So I put the name of the title in her name in good faith (sic). Q You mean to tell the court that when you purchased this land located at Los Angeles, Butuan City, the instrument of sale or the deed of sale was in the name of Lucila Ponce?A Yes, sir.[32] x x x x x x x x x Q Did you not ask your adviser Rudolfo [Torreon] whether it was wise for you to place the property in the name of Lucila Ponce when you are the one who is the owner?A Because we have really the intention to give it to her.[33]

Generally, contracts are obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present. When, however, the law requires that a contract be in some form in order that it may be valid, that requirement is absolute and indispensable. Its non-observance renders the contract void and of no effect.[34] Thus, under Article 749 of the Civil Code Article 749. In order that the donation of an immovable property may be valid, it must be made in a public document, specifying therein the property donated and the value of the charges which the donee must satisfy. The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor. If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments.

In the instant case, what transpired between Felomina and Lucila was a donation of an immovable property which was not embodied in a public instrument as required by the foregoing article. Being an oral donation, the transaction was void.[35] Moreover, even if Felomina enjoyed the fruits of the land with the intention of giving effect to the donation after her demise, the conveyance is still a void donation mortis causa, for non-compliance with the formalities of a will.[36] No valid title passed regardless of the intention of Felomina to donate the property to Lucila, because the naked intent to convey without the required solemnities does not suffice for gratuitous alienations, even as between the parties inter se.[37] At any rate, Felomina now seeks to recover title over the property because of the alleged ingratitude of the respondent spouses. Unlike ordinary contracts (which are perfected by the concurrence of the requisites of consent, object and cause pursuant to Article 1318[38] of the Civil Code), solemn contracts like donations are perfected only upon compliance with the legal formalities under Articles 748[39] and 749.[40] Otherwise stated, absent the solemnity requirements for validity, the mere intention of the parties does not give rise to a contract. The oral donation in the case at bar is therefore legally inexistent and an action for the declaration of the inexistence of a contract does not prescribe.[41] Hence, Felomina can still recover title from Lucila. Article 1448[42] of the Civil Code on implied trust finds no application in the instant case. The concept of implied trusts is that from the facts and circumstances of a given case, the existence of a trust relationship is inferred in order to effect the presumed intention of the parties.[43] Thus, one of the recognized exceptions to the establishment of an implied trust is where a contrary intention is proved, [44] as in the present case. From the testimony of Felomina herself, she wanted to give the lot to Lucila as a gift. To her mind, the execution of a deed with Lucila as the buyer and the subsequent issuance of title in the latters name were the acts that would effectuate her generosity. In so carrying out what she conceived, Felomina evidently displayed her unequivocal intention to transfer ownership of the lot to Lucila and not merely to constitute her as a trustee thereof. It was only when their relationship soured that she sought to revoke the donation on the theory of implied trust, though as previously discussed, there is nothing to revoke because the donation was never perfected.

In declaring Lucila as the owner of the disputed lot, the Court of Appeals applied, among others, the second sentence of Article 1448 which states x x x However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child. Said presumption also arises where the property is given to a person to whom the person paying the price stands in loco parentis or as a substitute parent.[45] The abovecited provision, however, is also not applicable here because, first, it was not established that Felomina stood as a substitute parent of Lucila; and second, even assuming that she did, the donation is still void because the transfer and acceptance was not embodied in a public instrument. We note that said provision merely raised a presumption that the conveyance was a gift but nothing therein exempts the parties from complying with the formalities of a donation. Dispensation of such solemnities would give rise to anomalous situations where the formalities of a donation and a will in donations inter vivos, and donations mortis causa, respectively, would be done away with when the transfer of the property is made in favor of a child or one to whom the donor stands in loco parentis. Such a scenario is clearly repugnant to the mandatory nature of the law on donation. While Felomina sought to recover the litigated lot on the ground of implied trust and not on the invalidity of donation, the Court is clothed with ample authority to address the latter issue in order to arrive at a just decision that completely disposes of the controversy.[46] Since rules of procedure are mere tools designed to facilitate the attainment of justice, they must be applied in a way that equitably and completely resolve the rights and obligations of the parties.[47] As to the trial courts award of attorneys fees and litigation expenses, the same should be deleted for lack of basis. Aside from the allegations in the complaint, no evidence was presented in support of said claims. The trial court made these awards in the dispositive portion of its decision without stating any justification therefor in the ratio decidendi. Their deletion is therefore proper.[48]

Finally, in deciding in favor of Felomina, the trial court ordered respondent spouses to execute a deed of sale over the subject lot in favor of Felomina in order to effect the transfer of title to the latter. The proper remedy, however, is provided under Section 10 (a), Rule 39 of the Revised Rules of Civil Procedure which provides that x x x [i]f real or personal property is situated within the Philippines, the court in lieu of directing a conveyance thereof may by an order divest the title of any party and vest it in others, which shall have the force and effect of a conveyance executed in due form of law. WHEREFORE, in view of all the foregoing, the petition is GRANTED and the June 16, 2003 decision of the Court of Appeals in CA-G.R. CV No. 69213 is REVERSED and SET ASIDE. The August 28, 2000 decision of the Regional Trial Court of Butuan City, Branch 2, in Civil Case No. 4270, is REINSTATED with the following MODIFICATIONS:(1) Declaring petitioner Felomina Abellana as the absolute owner of Lot 3, Pcs-10-000198; (2) Ordering the Register of Deeds of Butuan City to cancel TCT No. T-2874 in the name of respondent Lucila Ponce and to issue a new one in the name of petitioner Felomina Abellana; and (3) Deleting the awards of attorneys fees and litigation expenses for lack of basis. No pronouncement as to costs. SO ORDERED.

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

PANGANIBAN, J.:

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

The Case

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

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

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

2. Ordering the defendant to pay plaintiff the sum of Five Thousand (P5,000.00) Pesos, as and for attorney's fees; and

3. Costs against the defendant.

The defendant's counterclaims are hereby dismissed.

The Facts

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

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

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

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

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

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

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

On January 29, 1986, plaintiff-appellee sent a demand letter to defendant-appellant asking him to vacate the premises (Exh. "H"). A similar letter was sent by plaintiff-appellee's counsel to defendant on September 11, 1986 (Exh. "I"). However, defendant-appellant refused to vacate the premises claiming ownership thereof. Hence, plaintiff-appellee instituted the complaint for recovery of possession and damages against defendant-appellant.

Opposing plaintiff-appellee's version, defendant-appellant claimed that the house and lot in controversy were his by virtue of the following documents:

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

2. Deed of Assignment over Lot 8W executed by Catalina Jacob in favor of Eduardo Español dated September 30, 1980 (Exh. "5"); and

3. Deed of Assignment executed by Eduardo B. Español over Lot 8W and a residential house thereon in favor of defendant-appellant dated October 2, 1982 (Exh. "6").

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

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

Ruling of the Appellate Court

In reversing the trial court's decision,7 Respondent Court of Appeals anchored its ruling upon the absence of any showing that petitioner accepted his grandmother's donation of the subject land. Citing jurisprudence that the donee's failure to accept a donation whether in the same deed of donation or in a separate instrument renders the donation

null and void, Respondent Court denied petitioner's claim of ownership over the disputed land. The appellate court also struck down petitioner's contention that the formalities for a donation of real property should not apply to his case since it was an onerous one — he paid for the amortizations due on the land before and after the execution of the deed of donation — reasoning that the deed showed no burden, charge or condition imposed upon the donee; thus, the payments made by petitioner were his voluntary acts.

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

Issues

Petitioner anchors his petition on the following grounds:9

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

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

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

The Court's Ruling

The petition lacks merit.

Main Issue:Simple or Onerous Donation?

At the outset, let us differentiate between a simple donation and an onerous one. A simple or pure donation is one whose cause is pure liberality (no strings attached), while an onerous donation is one which is subject to burdens, charges or future services equal to or more in value than the thing donated. 10 Under Article 733 of the Civil Code, donations with an onerous cause shall be governed by the rules on contracts; hence, the formalities required for a valid simple donation are not applicable.

Petitioner contends that the burdens, charges or conditions imposed upon a donation need not be stated on the deed of donation itself. Thus, although the deed did not categorically impose any charge, burden or condition to be satisfied by him, the donation was onerous since he in fact and in reality paid for the installments in arrears and for the remaining balance of the lot in question. Being an onerous donation, his acceptance thereof may be express or implied, as provided under Art. 1320 of the Civil Code, and need not comply with the formalities required by Art. 749 of the same code. His payment of the arrearages and balance and his assertion of his right of possession against private respondent clearly indicate his acceptance of the donation.

We rule that the donation was simple, not onerous. Even conceding that petitioner's full payment of the purchase price of the lot might have been a burden to him, such payment was not however imposed by the donor as a condition for the donation. Rather, the deed explicitly stated:

That for and in consideration of the love and affection which the DONEE inspires in the DONOR, and as an act of liberality and generosity and considering further that the DONEE is a grandson of the DONOR, the DONOR hereby voluntarily and freely gives, transfer[s] and conveys, by way of donation unto said DONEE, his heirs, executors, administrators and assigns, all the right, title and interest which the said DONOR has in the above described real property, together with all the buildings and improvements found therein, free from all lines [sic] and encumbrances and charges whatsoever; 11 [emphasis supplied]

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

ATTY FORONDA:

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

WITNESS:

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

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

a Yes, Sir.

q What was the result of your verification?

a According to the person in the office, the papers of my grandmother is [sic] includ[ed] in the dilinquent [sic] list.

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

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

ATTY. FORONDA:

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

WITNESS:

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

q And [were] you able to pay?

a I was able to pay, sir.

q What were you able to pay, one half of the balance or the entire amounts [sic]?

a First, I paid the [sic] one half of the balance since the time the lot was awarded to us.

q What about the remaining balance, were you able to pay it?

a I was able to pay that, sir.

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

a Yes, sir. 12

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

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

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

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

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

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

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

In the words of the esteemed Mr. Justice Jose C. Vitug, 14 "Like any other contract, an agreement of the parties is essential. The donation, following the theory of cognition (Article 1319, Civil Code), is perfected only upon the moment the donor knows of the acceptance by the donee." Furthermore, "[i]f the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments." 15

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

. . . Title to immovable property does not pass from the donor to the donee by virtue of a deed of donation until and unless it has been accepted in a public instrument and the donor duly notified thereof. The acceptance may be made in the very same instrument of donation. If the acceptance does not appear in the same document, it must be made in another. Solemn words are not necessary; it is sufficient if it shows the intention to accept. But in this case it is necessary that formal notice thereof be given to the donor, and the fact that due notice has been given must be noted in both instruments (that containing the offer to donate and that showing the acceptance). Then and only then is the donation perfected. If the instrument of donation has been recorded in the registry of property, the instrument that shows the acceptance should also be recorded. Where the deed of donation fails to show the acceptance, or where the formal notice of the acceptance, made in a separate instrument, is either not given to the donor or else not noted in the deed of donation and in the separate acceptance, the donation is null and void. 17

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

True, the acceptance of a donation may be made at any time during the lifetime of the donor. And granting arguendo that such acceptance may still be admitted in evidence on appeal, there is still need for proof that a formal notice of such acceptance was received by the donor and noted in both the deed of donation and the separate instrument embodying the acceptance. At the very least, this last legal requisite of annotation in both instruments

of donation and acceptance was not fulfilled by petitioner. For this reason, the subject lot cannot be adjudicated to him.

Secondary Issue:Supervening Events

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

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

Furthermore, the same resolution states:

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

The above findings of the investigator are, however, directly contradictory to the testimonies in court of petitioner himself and of private respondent. Petitioner claimed the following: that the house constructed on the subject lot was owned by his grandmother Catalina Jacob; that before the latter left for Canada in 1977, Eduardo Español had already been living in the same house and continued to do so until 1982; and that private respondent occupied the premises after Español left. 24 On the other hand, private respondent testified that he bought the subject house and lot from Eduardo Español in 1982, after which he and his family occupied the same; but sometime in 1985, they had to leave the place due to a road-widening project which reduced the house to "about three meters [in] length and one arm[']s width." 25

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

Cabanlit's Claim of Ownership

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

In disposing of the principal issue of the right of petitioner over the subject property under the deed of donation, we arrive at one definite conclusion: on the basis of the alleged donation, petitioner cannot be considered the

lawful owner of the subject property. This does not necessarily mean, however, that private respondent is automatically the rightful owner.

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

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

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

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

SO ORDERED.

ARANGOTE vs. MAGLUNOB

CHICO-NAZARIO, J.: Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to reverse and set aside the Decision[1] dated 27 October 2006 and Resolution[2] dated 29 June 2007 of the Court of Appeals in CA-G.R. SP No. 64970. In its assailed Decision, the appellate court affirmed the Decision[3] dated 12 September 2000 of the Regional Trial Court (RTC), 6th Judicial Region, Branch 1, Kalibo, Aklan, in Civil Case No. 5511, which reversed the Decision[4] dated 6 April 1998 of the 7th Municipal Circuit Trial Court (MCTC) of Ibajay-Nabas, Ibajay, Aklan, in Civil Case No. 156; and declared[5] the herein respondent-Spouses Martin and Lourdes Maglunob (Spouses Maglunob) and respondent Romeo Salido (Romeo) as the lawful owners and possessors of Lot 12897 with an area of 982 square meters, more or less, located in Maloco, Ibajay, Aklan (subject property). In its assailed Resolution, the appellate court denied herein petitioner Elvira T. Arangotes Motion for Reconsideration. Elvira T. Arangote, herein petitioner married to Ray Mars E. Arangote, is the registered owner of the subject property, as evidenced by Original Certificate of Title (OCT) No. CLOA-1748.[6] Respondents Martin (Martin II) and Romeo are first cousins and the grandnephews of Esperanza Maglunob-Dailisan (Esperanza), from whom petitioner acquired the subject property. The Petition stems from a Complaint[7] filed by petitioner and her husband against the respondents for Quieting of Title, Declaration of Ownership and Possession, Damages with Preliminary Injunction, and Issuance of Temporary Restraining Order before the MCTC, docketed as Civil Case No. 156. The Complaint alleged that Esperanza inherited the subject property from her uncle Victorino Sorrosa by virtue of a notarized Partition Agreement[8] dated 29 April 1985, executed by the latters heirs. Thereafter, Esperanza declared the subject property in her name for real property tax purposes, as evidenced by Tax Declaration No. 16218 (1985).[9] The Complaint further stated that on 24 June 1985, Esperanza executed a Last Will and Testament[10] bequeathing the subject property to petitioner and her husband, but it was never probated. On 9 June 1986, Esperanza

executed another document, an Affidavit,[11] in which she renounced, relinquished, waived and quitclaimed all her rights, share, interest and participation whatsoever in the subject property in favor of petitioner and her husband. On the basis thereof, Tax Declaration No. 16218 in the name of Esperanza was cancelled and Tax Declaration No. 16666[12] (1987) was issued in the name of the petitioner and her husband. In 1989, petitioner and her husband constructed a house on the subject property. On 26 March 1993, OCT No. CLOA-1748 was issued by the Secretary of the Department of Agrarian Reform (DAR) in the name of petitioner, married to Ray Mars E. Arangote. However, respondents, together with some hired persons, entered the subject property on 3 June 1994 and built a hollow block wall behind and in front of petitioners house, which effectively blocked the entrance to its main door. As a consequence thereof, petitioner and her husband were compelled to institute Civil Case No. 156. In their Answer with Counterclaim in Civil Case No. 156, respondents averred that they co-owned the subject property with Esperanza. Esperanza and her siblings, Tomas and Inocencia, inherited the subject property, in equal shares, from their father Martin Maglunob (Martin I). When Tomas and Inocencia passed away, their shares passed on by inheritance to respondents Martin II and Romeo, respectively. Hence, the subject property was co-owned by Esperanza, respondent Martin II (together with his wife Lourdes), and respondent Romeo, each holding a one-third pro-indiviso share therein. Thus, Esperanza could not validly waive her rights and interest over the entire subject property in favor of the petitioner. Respondents also asserted in their Counterclaim that petitioner and her husband, by means of fraud, undue influence and deceit were able to make Esperanza, who was already old and illiterate, affix her thumbmark to the Affidavit dated 9 June 1986, wherein she renounced all her rights and interest over the subject property in favor of petitioner and her husband. Respondents thus prayed that the OCT issued in petitioners name be declared null and void insofar as their two-thirds shares are concerned. After trial, the MCTC rendered its Decision dated 6 April 1998 in Civil Case No. 156, declaring petitioner and her husband as the true and lawful owners of the subject property. The decretal portion of the MCTC Decision reads:

WHEREFORE, judgment is hereby rendered: A. Declaring the [herein petitioner and her husband] the true, lawful and exclusive owners and entitled to the possession of the [subject property] described and referred to under paragraph 2 of the [C]omplaint and covered by Tax Declaration No. 16666 in the names of the [petitioner and her husband]; B. Ordering the [herein respondents] and anyone hired by, acting or working for them, to cease and desist from asserting or claiming any right or interest in, or exercising any act of ownership or possession over the [subject property]; C. Ordering the [respondents] to pay the [petitioner and her husband] the amount of P10,000.00 as attorneys fee. With cost against the [respondents].[13] The respondents appealed the aforesaid MCTC Decision to the RTC. Their appeal was docketed as Civil Case No. 5511. Respondents argued in their appeal that the MCTC erred in not dismissing the Complaint filed by the petitioner and her husband for failure to identify the subject property therein. Respondents further faulted the MCTC for not declaring Esperanzas Affidavit dated 9 June 1986 -- relinquishing all her rights and interest over the subject property in favor of petitioner and her husband -- as null and void insofar as respondents two-thirds share in the subject property is concerned. On 12 September 2000, the RTC rendered its Decision reversing the MCTC Decision dated 6 April 1998. The RTC adjudged respondents, as well as the other heirs of Martin Maglunob, as the lawful owners and possessors of the entire subject property. The RTC decreed: WHEREFORE, judgment is hereby rendered as follows: 1) The appealed [D]ecision is REVERSED;2) [Herein respondents] and the other heirs of Martin Maglunob are declared the lawful owners and possessors of the whole [subject property]

as described in Paragraph 2 of the [C]omplaint, as against the [herein petitioner and her husband]. 3) [Petitioner and her husband] are ordered to immediately turn over possession of the [subject property] to the [respondents] and the other heirs of Martin Maglunob; and 4) [Petitioner and her husband] are ordered to pay [respondents] attorneys fees of P5,000.00, other litigation expenses of P5,000.00, moral damages of P10,000.00 and exemplary damages of P5,000.00.[14] Petitioner and her husband filed before the RTC, on 26 September 2000, a Motion for New Trial or Reconsideration[15] on the ground of newly discovered evidence consisting of a Deed of Acceptance[16] dated 23 September 2000, and notice[17] of the same, which were both made by the petitioner, for herself and in behalf of her husband,[18] during the lifetime of Esperanza. In the RTC Order[19] dated 2 May 2001, however, the RTC denied the aforesaid Motion for New Trial or Reconsideration. The petitioner and her husband then filed a Petition for Review, under Rule 42 of the 1997 Revised Rules of Civil Procedure, before the Court of Appeals, where the Petition was docketed as CA-G.R. SP No. 64970. In their Petition before the appellate court, petitioner and her husband raised the following errors committed by the RTC in its 12 September 2000 Decision: I. It erred in reversing the [D]ecision of the [MCTC]; II. It erred in declaring the [herein respondents] and the other heirs of Martin Maglunob as the lawful owners and possessors of the whole [subject property]; III. It erred in declaring [OCT] No. CLOA-1748 in the name of [herein petitioner] Elvie T. Arangote as null and void; IV. It erred in denying [petitioner and her husbands] [M]otion for [N]ew [T]rial or [R]econsideration dated [26 September 2000; and

V. It erred in not declaring the [petitioner and her husband] as possessors in good faith.[20] On 27 October 2006, the Court of Appeals rendered a Decision denying the Petition for Review of petitioner and her husband and affirming the RTC Decision dated 12 September 2000. Petitioner and her husbands subsequent Motion for Reconsideration was similarly denied by the Court of Appeals in its Resolution dated 29 June 2007. Hence, petitioner[21] now comes before this Court raising in her Petition the following issues: I. Whether the [RTC] acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it declared the [petitioner and her husbands title to the subject property] null and void; II. Whether the [RTC] acted with grave abuse of discretion amounting to lack of jurisdiction when it declared the Affidavit of Quitclaim null and void; and III. Whether the [RTC] and the Honorable Court of Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it rejected petitioners claim as possessors (sic) in good faith, hence, entitled to the rights provided in [Article] 448 and [Article] 546 of the Civil Code.[22] Petitioner contends that the aforesaid OCT No. CLOA-1748 was issued in her name on 26 March 1993 and was registered in the Registry of Deeds of Aklan on 20 April 1993. From 20 April 1993 until the institution of Civil Case No. 156 on 10 June 1994 before the MCTC, more than one year had already elapsed. Considering that a Torrens title can only be attacked within one year after the date of the issuance of the decree of registration on the ground of fraud and that such attack must be through a direct proceeding, it was an error on the part of the RTC and the Court of Appeals to declare OCT No. CLOA-1748 null and void. Petitioner additionally posits that both the RTC and the Court of Appeals committed a mistake in declaring null and void the Affidavit dated 9 June

1986 executed by Esperanza, waiving all her rights and interest over the subject property in favor of petitioner and her husband. Esperanzas Affidavit is a valid and binding proof of the transfer of ownership of the subject property in petitioners name, as it was also coupled with actual delivery of possession of the subject property to petitioner and her husband. The Affidavit is also proof of good faith on the part of petitioner and her husband. Finally, petitioner argues that, assuming for the sake of argument, that Esperanzas Affidavit is null and void, petitioner and her husband had no knowledge of any flaw in Esperanzas title when the latter relinquished her rights to and interest in the subject property in their favor. Hence, petitioner and her husband can be considered as possessors in good faith and entitled to the rights provided under Articles 448 and 546 of the Civil Code. This present Petition is devoid of merit. It is a hornbook doctrine that the findings of fact of the trial court are entitled to great weight on appeal and should not be disturbed except for strong and valid reasons, because the trial court is in a better position to examine the demeanor of the witnesses while testifying. It is not a function of this Court to analyze and weigh evidence by the parties all over again. This Courts jurisdiction is, in principle, limited to reviewing errors of law that might have been committed by the Court of Appeals.[23] This rule, however, is subject to several exceptions,[24] one of which is present in this case, i.e., when the factual findings of the Court of Appeals and the trial court are contradictory. In this case, the findings of fact of the MCTC as regards the origin of the subject property are in conflict with the findings of fact of both the RTC and the Court of Appeals. Hence, this Court will have to examine the records to determine first the true origin of the subject property and to settle whether the respondents have the right over the same for being co-heirs and co-owners, together with their grand aunt, Esperanza, before this Court can resolve the issues raised by the petitioner in her Petition.

After a careful scrutiny of the records, this Court affirms the findings of both the RTC and the Court of Appeals as regards the origin of the subject property and the fact that respondents, with their grand aunt Esperanza, were co-heirs and co-owners of the subject property.

The records disclosed that the subject property was part of a parcel of land[25] situated in Maloco, Ibajay, Aklan, consisting of 7,176 square meters and commonly owned in equal shares by the siblings Pantaleon Maglunob (Pantaleon) and Placida Maglunob-Sorrosa (Placida). Upon the death of Pantaleon and Placida, their surviving and legal heirs executed a Deed of Extrajudicial Settlement and Partition of Estate in July 1981,[26] however, the Deed was not notarized. Considering that Pantaleon died without issue, his one-half share in the parcel of land he co-owned with Placida passed on to his four siblings (or their respective heirs, if already deceased), namely: Placida, Luis, Martin I, and Victoria, in equal shares. According to the aforementioned Deed of Extrajudicial Settlement and Partition of Estate, the surviving and legal heirs of Pantaleon and Placida agreed to have the parcel of land commonly owned by the siblings declared for real property tax purposes in the name of Victorino Sorrosa (Victorino), Placidas husband. Thus, Tax Declarations No. 5988 (1942),[27] No. 6200 (1945)[28] and No. 7233 (1953)[29] were all issued in the name of Victorino. Since Martin I already passed away when the Deed of Extrajudicial Settlement and Partition of Estate was executed, his heirs[30] were represented therein by Esperanza. By virtue of the said Deed, Martin I received as inheritance a portion of the parcel of land measuring 897 square meters. After the death of Victorino, his heirs[31] executed another Partition Agreement on 29 April 1985, which was notarized on the same date. The Partition Agreement mentioned four parcels of land. The subject property, consisting of a portion of the consolidated parcels 1, 2, and 3, and measuring around 982 square meters, was allocated to Esperanza. In comparison, the property given to Esperanza under the Partition Agreement is bigger than the one originally allocated to her earlier under the Deed of Extrajudicial Settlement and Partition of Estate dated July 1981, which had an area of only 897 square meters. It may be reasonably assumed, however, that the subject property, measuring 982 square meters, allocated to Esperanza under the Partition Agreement dated 29 April 1985, is already inclusive of the smaller parcel of 897 square meters assigned to her under the Deed of Extrajudicial Settlement and Partition of Estate dated July 1981. As explained by the RTC in its 12 September 2000 Decision:

The [subject property] which is claimed by the [herein petitioner and her husband] and that which is claimed by the [herein respondents] are one and the same, the difference in area and technical description being due to the repartition and re-allocation of the parcel of land originally co-owned by Pantaleon Maglunob and his sister Placida Maglunob and subsequently declared in the name of [Victorino] under Tax Declaration No. 5988 of 1949.[32] It is clear from the records that the subject property was not Esperanzas exclusive share, but also that of the other heirs of her father, Martin I. Esperanza expressly affixed her thumbmark to the Deed of Extrajudicial Settlement of July 1981 not only for herself, but also on behalf of the other heirs of Martin I. Though in the Partition Agreement dated 29 April 1985 Esperanza affixed her thumbmark without stating that she was doing so not only for herself, but also on behalf of the other heirs of Martin I, this does not mean that Esperanza was already the exclusive owner thereof. The evidence shows that the subject property is the share of the heirs of Martin I. This is clear from the sketch[33] attached to the Partition Agreement dated 29 April 1985, which reveals the proportionate areas given to the heirs of the two siblings, Pantaleon and Placida, who were the original owners of the whole parcel of land[34] from which the subject property was taken. Further, it bears emphasis that the Partition Agreement was executed by and among the son, grandsons, granddaughters and cousins of Victorino. Esperanza was neither the granddaughter nor the cousin of Victorino, as she was only Victorinos grandniece. The cousin of Victorino is Martin I, Esperanzas father. In effect, therefore, the subject property allotted to Esperanza in the Partition Agreement was not her exclusive share, as she holds the same for and on behalf of the other heirs of Martin I, who was already deceased at the time the Partition Agreement was made. To further bolster the truth that the subject property was not exclusively owned by Esperanza, the Affidavit she executed in favor of petitioner and her husband on 6 June 1985 was worded as follows: That I hereby renounce, relinquish, waive and quitclaim all my rights, share, interest and participation whatsoever in the [subject property] unto the said

Sps. Ray Mars Arangote and Elvira T. Arangote, their heirs, successors, and assigns including the improvement found thereon;[35] Logically, if Esperanza fully owned the subject property, she would have simply waived her rights to and interest in the subject property, without mentioning her share and participation in the same. By including such words in her Affidavit, Esperanza was aware of and was limiting her waiver, renunciation, and quitclaim to her one-third share and participation in the subject property. Going to the issues raised by the petitioner in this Petition, this Court will resolve the same concurrently as they are interrelated. In this case, the petitioner derived her title to the subject property from the notarized Affidavit executed by Esperanza, wherein the latter relinquished her rights, share, interest and participation over the same in favor of the petitioner and her husband. A careful perusal of the said Affidavit reveals that it is not what it purports to be. Esperanzas Affidavit is, in fact, a Donation. Esperanzas real intent in executing the said Affidavit was to donate her share in the subject property to petitioner and her husband. As no onerous undertaking is required of petitioner and her husband under the said Affidavit, the donation is regarded as a pure donation of an interest in a real property covered by Article 749 of the Civil Code.[36] Article 749 of the Civil Code provides: Art. 749. In order that the donation of an immovable may be valid, it must be made in a public document, specifying therein the property donated and the value of the charges which the donee must satisfy. The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor. If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments.

From the aforesaid provision, there are three requisites for the validity of a simple donation of a real property, to wit: (1) it must be made in a public instrument; (2) it must be accepted, which acceptance may be made either in the same Deed of Donation or in a separate public instrument; and (3) if the acceptance is made in a separate instrument, the donor must be notified in an authentic form, and the same must be noted in both instruments. This Court agrees with the RTC and the Court of Appeals that the Affidavit executed by Esperanza relinquishing her rights, share, interest and participation over the subject property in favor of the petitioner and her husband suffered from legal infirmities, as it failed to comply with the aforesaid requisites of the law. In Sumipat v. Banga,[37] this Court declared that title to immovable property does not pass from the donor to the donee by virtue of a Deed of Donation until and unless it has been accepted in a public instrument and the donor duly notified thereof. The acceptance may be made in the very same instrument of donation. If the acceptance does not appear in the same document, it must be made in another. Where the Deed of Donation fails to show the acceptance, or where the formal notice of the acceptance, made in a separate instrument, is either not given to the donor or else not noted in the Deed of Donation and in the separate acceptance, the donation is null and void.[38] In the present case, the said Affidavit, which is tantamount to a Deed of Donation, met the first requisite, as it was notarized; thus, it became a public instrument. Nevertheless, it failed to meet the aforesaid second and third requisites. The acceptance of the said donation was not made by the petitioner and her husband either in the same Affidavit or in a separate public instrument. As there was no acceptance made of the said donation, there was also no notice of the said acceptance given to the donor, Esperanza. Therefore, the Affidavit executed by Esperanza in favor of petitioner and her husband is null and void. The subsequent notarized Deed of Acceptance[39] dated 23 September 2000, as well as the notice[40] of such acceptance, executed by the petitioner did not cure the defect. Moreover, it was only made by the petitioner several years after the Complaint was filed in court, or when the

RTC had already rendered its Decision dated 12 September 2000, although it was still during Esperanzas lifetime. Evidently, its execution was a mere afterthought, a belated attempt to cure what was a defective donation. It is true that the acceptance of a donation may be made at any time during the lifetime of the donor. And granting arguendo that such acceptance may still be admitted in evidence on appeal, there is still need for proof that a formal notice of such acceptance was received by the donor and noted in both the Deed of Donation and the separate instrument embodying the acceptance.[41] At the very least, this last legal requisite of annotation in both instruments of donation and acceptance was not fulfilled by the petitioner. Neither the Affidavit nor the Deed of Acceptance bears the fact that Esperanza received notice of the acceptance of the donation by petitioner. For this reason, even Esperanzas one-third share in the subject property cannot be adjudicated to the petitioner. With the foregoing, this Court holds that the RTC and the Court of Appeals did not err in declaring null and void Esperanzas Affidavit. The next issue to be resolved then is whether the RTC, as well as the Court of Appeals, erred in declaring OCT No. CLOA-1748 in the name of petitioner and her husband null and void. Again, this Court answers the said issue in the negative. Section 48 of Presidential decree No. 1529 states: SEC. 48. Certificate not subject to collateral attack. - A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law. Such proscription has long been enshrined in Philippine jurisprudence. The judicial action required to challenge the validity of title is a direct attack, not a collateral attack.[42] The attack is considered direct when the object of an action is to annul or set aside such proceeding, or enjoin its enforcement. Conversely, an attack is indirect or collateral when, in an action to obtain a different relief, an attack on the proceeding is nevertheless made as an incident thereof. Such

action to attack a certificate of title may be an original action or a counterclaim, in which a certificate of title is assailed as void.[43] A counterclaim is considered a new suit in which the defendant is the plaintiff and the plaintiff in the complaint becomes the defendant. It stands on the same footing as, and is to be tested by the same rules as if it were, an independent action.[44] In their Answer to the Complaint for Quieting of Title filed by the petitioner and her husband before the MCTC, respondents included therein a Counterclaim wherein they repleaded all the material allegations in their affirmative defenses, the most essential of which was their claim that petitioner and her husband -- by means of fraud, undue influence and deceit -- were able to make their grand aunt, Esperanza, who was already old and illiterate, affix her thumbmark to the Affidavit, wherein she renounced, waived, and quitclaimed all her rights and interest over the subject property in favor of petitioner and her husband. In addition, respondents maintained in their Answer that as petitioner and her husband were not tenants either of Esperanza or of the respondents, the DAR could not have validly issued in favor of petitioner and her husband OCT No. CLOA-1748. Thus, the respondents prayed, in their counterclaim in Civil Case No. 156 before the MCTC, that OCT No. CLOA-1748 issued in the name of petitioner, married to Ray Mars E. Arangote, be declared null and void, insofar as their two-thirds shares in the subject property are concerned. It is clear, thus, that respondents Answer with Counterclaim was a direct attack on petitioners certificate of title. Furthermore, since all the essential facts of the case for the determination of the validity of the title are now before this Court, to require respondents to institute a separate cancellation proceeding would be pointlessly circuitous and against the best interest of justice. Esperanzas Affidavit, which was the sole basis of petitioners claim to the subject property, has been declared null and void. Moreover, petitioner and her husband were not tenants of the subject property. In fact, petitioner herself admitted in her Complaint filed before the MCTC that her husband is out of the country, rendering it impossible for him to work on the subject property as a tenant. Instead of cultivating the subject property, petitioner and her husband possessed the same by constructing a house thereon. Thus, it is highly suspicious how the petitioner was able to secure from the

DAR a Certificate of Land Ownership Award (CLOA) over the subject property. The DAR awards such certificates to the grantees only if they fulfill the requirements of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Program (CARP).[45] Hence, the RTC and the Court of Appeals did not err in declaring null and void OCT No. CLOA-1748 in the name of the petitioner, married to Ray Mars E. Arangote. Considering that Esperanza died without any compulsory heirs and that the supposed donation of her one-third share in the subject property per her Affidavit dated 9 June 1985 was already declared null and void, Esperanzas one-third share in the subject property passed on to her legal heirs, the respondents.

As petitioners last-ditch effort, she claims that she is a possessor in good faith and, thus, entitled to the rights provided for under Articles 448 and 546 of the Civil Code. This claim is untenable. The Civil Code describes a possessor in good faith as follows:

Art. 526. He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing. Mistake upon a doubtful or difficult question of law may be the basis of good faith. Art. 1127. The good faith of the possessor consists in the reasonable belief that the person from whom he received the thing was the owner thereof, and could transmit his ownership. Possession in good faith ceases from the moment defects in the title are made known to the possessor by extraneous evidence or by a suit for recovery of the property by the true owner. Every possessor in good faith becomes a possessor in bad faith from the moment he becomes aware that what he believed to be true is not so.[46]

In the present case, when respondents came to know that an OCT over the subject property was issued and registered in petitioners name on 26 March 1993, respondents brought a Complaint on 7 August 1993 before the Lupon of Barangay Maloco, Ibajay, Aklan, challenging the title of petitioner to the subject property on the basis that said property constitutes the inheritance of respondent, together with their grandaunt Esperanza, so Esperanza had no authority to relinquish the entire subject property to petitioner. From that moment, the good faith of the petitioner had ceased.

Petitioner cannot be entitled to the rights under Articles 448 and 546 of the Civil Code, because the rights mentioned therein are applicable only to builders in good faith and not to possessors in good faith. Moreover, the petitioner cannot be considered a builder in good faith of the house on the subject property. In the context that such term is used in particular reference to Article 448 of the Civil Code, a builder in good faith is one who, not being the owner of the land, builds on that land, believing himself to be its owner and unaware of any defect in his title or mode of acquisition.[47] The various provisions of the Civil Code, pertinent to the subject, read: Article 448. The owner of the land on which anything has been built, sown, or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such a case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. Article 449. He who builds, plants, or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity. Article 450. The owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the work, or that the

planting or sowing be removed, in order to replace things in their former condition at the expense of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of the land, and the sower the proper rent. Under the foregoing provisions, the builder in good faith can compel the landowner to make a choice between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to instead remove it from the land. In order, however, that the builder can invoke that accruing benefit and enjoy his corresponding right to demand that a choice be made by the landowner, he should be able to prove good faith on his part.[48] Good faith, here understood, is an intangible and abstract quality with no technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage. An individuals personal good faith is a concept of his own mind and, therefore, may not conclusively be determined by his protestations alone. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry. The essence of good faith lies in an honest belief in the validity of ones right, ignorance of a superior claim, and absence of intention to overreach another. Applied to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.[49] In this case, the subject property waived and quitclaimed by Esperanza to the petitioner and her husband in the Affidavit was only covered by a tax declaration in the name of Esperanza. Petitioner did not even bother to look into the origin of the subject property and to probe into the right of Esperanza to relinquish the same. Thus, when petitioner and her husband built a house thereon in 1989 they cannot be considered to have acted in good faith as they were fully aware that when Esperanza executed an Affidavit relinquishing in their favor the subject property the only proof of Esperanzas ownership over the same was a mere tax declaration. This fact

or circumstance alone was enough to put the petitioner and her husband under inquiry. Settled is the rule that a tax declaration does not prove ownership. It is merely an indicium of a claim of ownership. Payment of taxes is not proof of ownership; it is, at best, an indicium of possession in the concept of ownership. Neither tax receipts nor a declaration of ownership for taxation purposes is evidence of ownership or of a right to possess realty when not supported by other effective proofs.[50] With the foregoing, the petitioner is not entitled to the rights under Article 448 and 546 as the petitioner is not a builder and possessor in good faith. WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 64970, dated 27 October 2006 and 29 June 2007, respectively, affirming the RTC Decision dated 12 September 2000 in Civil Case No. 5511 and declaring the respondents the lawful owners and possessors of the subject property are hereby AFFIRMED. No costs.

AGAPAY vs. PALANGGR No. 116668, July 28, 1997

FACTS: Miguel Palang contracted marriage with Carlina in Pangasinan on 1949. He left to work in Hawaii a few months after the wedding. Their only child Herminia was born in May 1950. The trial court found evident that as early as 1957, Miguel attempted to Divorce Carlina in Hawaii. When he returned for good in 1972, he refused to lived with Carlina and stayed alone in a house in Pozzorubio Pangasinan.

The 63 year old Miguel contracted a subsequent marriage with 19 year old Erlinda Agapay, herein petitioner. 2 months earlier, they jointly purchased a parcel of agricultural land located at Binalonan Pangasinan. A house and lot in the same place was likewise purchased. On the other hand, Miguel and Carlina executed a Deed of Donation as a form of compromise agreement and agreed to donate their conjugal property consisting of 6 parcels of land to their child Herminia.

Miguel and Erlinda’s cohabitation produced a son named Kristopher. In 1979, they were convicted of concubinage upon Carlina’s complaint. 2 years later, Miguel died. Carlina and her daughter instituted this case for recovery of ownership and possession with damages against petitioner. They sought to get back the land and the house and lot located at Binalonan allegedly purchase by Miguel during his cohabitation with petitioner. The lower court dismissed the complaint but CA reversed the decision.

ISSUE: Whether the agricultural land and the house and lot should be awarded in favor of Erlinda Agapay.

HELD: The sale of the riceland on May 17, 1973, was made in favor of Miguel and Erlinda. However, their marriage is void because of the subsisting marriage with Carlina. Only the properties acquired by both parties through their actual joint contribution shall be owned by them in proportion to their respective contributions. It is required that there be an actual contribution. If actual contribution is not proved, there will be no co-ownership and no presumption of equal shares.

Erlinda established in her testimony that she was engaged in the business of buy and sell and had a sari-sari store. However, she failed to persuade the court that she actually contributed money to but the subjected riceland.

When the land was acquired, she was only around 20 years old compared to Miguel who was already 64 years old and a pensioner of the US Government. Considering his youthfulness, its unrealistic how she could have contributed the P3,750 as her share. Thus, the court finds no basis to justify the co-ownership with Miguel over the same. Hence, the Riceland should, as correctly held by CA, revert to the conjugal partnership property of the deceased and Carlina.

It is immaterial that Miguel and Carlina previously agreed to donate their conjugal property in favor of Herminia. Separation of property between spouses during the marriage shall not take place except by judicial order or without judicial conferment when there is an express stipulation in the marriage settlements. The judgment resulted from the compromise was not specifically for separation of property and should not be so inferred.

With respect to the house and lot, Atty Sagun, notary public who prepared the deed of conveyance for the property revealed the falshood of Erlinda’s claim that she bought such property for P20,000 when she was 22 years old. The lawyer testified that Miguel provided the money for the purchase price and directed Erlinda’s name alone be placed as the vendee.

The transaction made by Miguel to Erlinda was properly a donation and which was clearly void and inexistent by express provision of the law because it was made between persons guilty of adultery or concubinage at the time of the donation. Moreover, Article 87 of the Family Code, expressly provides that the prohibition against donation between spouses now applies to donations between persons living together as husband and wife without a valid marriage, for otherwise, the condition of those who incurred guilt would turn out to be better than those in legal union.

AGAPAY vs. PALANG

Before us is a petition for review of the decision of the Court of Appeals in CA-G.R. CV No. 24199 entitled Erlinda Agapay v. Carlina (Cornelia) Palang and Herminia P. Dela Cruz dated June 22, 1994 involving the ownership of two parcels of land acquired during the cohabitation of petitioner and private respondents legitimate spouse.

Miguel Palang contracted his first marriage on July 16, 1949 when he took private respondent Carlina (or Cornelia) Vallesterol as a wife at the Pozorrubio Roman Catholic Church in Pangasinan. A few months after the wedding, in October 1949, he left to work in Hawaii. Miguel and Carlinas only child, Herminia Palang, was born on May 12, 1950.

Miguel returned in 1954 for a year. His next visit to the Philippines was in 1964 and during the entire duration of his year-long sojourn he stayed in Zambales with his brother, not in Pangasinan with his wife and child. The trial court found evidence that as early as 1957, Miguel had attempted to divorce Carlina in Hawaii.[1] When he returned for good in 1972, he refused to live with private respondents, but stayed alone in a house in Pozorrubio, Pangasinan.

On July 15, 1973, the then sixty-three-year-old Miguel contracted his second marriage with nineteen-year-old Erlinda Agapay, herein petitioner.[2] Two months earlier, on May 17, 1973, Miguel and Erlinda, as evidenced by the Deed of Sale, jointly purchased a parcel of agricultural land located at San Felipe, Binalonan, Pangasinan with an area of 10,080 square meters. Consequently, Transfer Certificate of Title No. 101736 covering said rice land was issued in their names.

A house and lot in Binalonan, Pangasinan was likewise purchased on September 23, 1975, allegedly by Erlinda as the sole vendee. TCT No. 143120 covering said property was later issued in her name.

On October 30, 1975, Miguel and Cornelia Palang executed a Deed of Donation as a form of compromise agreement to settle and end a case filed by the latter.[3] The parties therein agreed to donate their conjugal property consisting of six parcels of land to their only child, Herminia Palang.[4]

Miguel and Erlindas cohabitation produced a son, Kristopher A. Palang, born on December 6, 1977. In 1979, Miguel and Erlinda were convicted of Concubinage upon Carlinas complaint.[5] Two years later, on February 15, 1981, Miguel died.

On July 11, 1981, Carlina Palang and her daughter Herminia Palang de la Cruz, herein private respondents, instituted the case at bar, an action for recovery of ownership and possession with damages against petitioner before the Regional Trial Court in Urdaneta, Pangasinan (Civil Case No. U-4265). Private respondents sought to get back the riceland and the house and lot both located at Binalonan, Pangasinan allegedly purchased by Miguel during his cohabitation with petitioner.

Petitioner, as defendant below, contended that while the riceland covered by TCT No. 101736 is registered in their names (Miguel and Erlinda), she had already given her half of the property to their son Kristopher Palang. She added that the house and lot covered by TCT No. 143120 is her sole property, having bought the same with her own money. Erlinda added that Carlina is precluded from claiming aforesaid properties since the latter had already donated their conjugal estate to Herminia.

After trial on the merits, the lower court rendered its decision on June 30, 1989 dismissing the complaint after declaring that there was little evidence to prove that the subject properties pertained to the conjugal property of Carlina and Miguel Palang. The lower court went on to provide for the intestate shares of the parties, particularly of Kristopher Palang, Miguels illegitimate son. The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered-

1) Dismissing the complaint, with costs against plaintiffs;

2) Confirming the ownership of defendant Erlinda Agapay of the residential lot located at Poblacion, Binalonan, Pangasinan, as evidenced by TCT No. 143120, Lot 290-B including the old house standing therein;

3) Confirming the ownership of one-half (1/2) portion of that piece of agricultural land situated at Balisa, San Felipe, Binalonan, Pangasinan, consisting of 10,080 square meters and as evidenced by TCT No. 101736, Lot 1123-A to Erlinda Agapay;

4) Adjudicating to Kristopher Palang as his inheritance from his deceased father, Miguel Palang, the one-half (1/2) of the agricultural land situated at Balisa, San Felipe, Binalonan, Pangasinan, under TCT No. 101736 in the name of Miguel Palang, provided that the former (Kristopher) executes, within 15 days after this decision becomes final and executory, a quit-claim forever renouncing any claims to annul/reduce the donation to Herminia Palang de la Cruz of all conjugal properties of her parents, Miguel Palang and Carlina Vallesterol Palang, dated October 30, 1975, otherwise, the estate of deceased Miguel Palang will have to be settled in another separate action;

5) No pronouncement as to damages and attorneys fees.

SO ORDERED.[6]

On appeal, respondent court reversed the trial courts decision. The Court of Appeals rendered its decision on July 22, 1994 with the following dispositive portion:

WHEREFORE, PREMISES CONSIDERED, the appealed decision is hereby REVERSED and another one entered:

1. Declaring plaintiffs-appellants the owners of the properties in question;

2. Ordering defendant-appellee to vacate and deliver the properties in question to herein plaintiffs-appellants;

3. Ordering the Register of Deeds of Pangasinan to cancel Transfer Certificate of Title Nos. 143120 and 101736 and to issue in lieu thereof another certificate of title in the name of plaintiffs-appellants.

No pronouncement as to costs.[7]

Hence, this petition.

Petitioner claims that the Court of Appeals erred in not sustaining the validity of two deeds of absolute sale covering the riceland and the house and lot, the first in favor of Miguel Palang and Erlinda Agapay and the second, in favor of Erlinda Agapay alone. Second, petitioner contends that

respondent appellate court erred in not declaring Kristopher A. Palang as Miguel Palangs illegitimate son and thus entitled to inherit from Miguels estate. Third, respondent court erred, according to petitioner, in not finding that there is sufficient pleading and evidence that Kristoffer A. Palang or Christopher A. Palang should be considered as party-defendant in Civil Case No. U-4625 before the trial court and in CA-G.R. No. 24199.[8]

After studying the merits of the instant case, as well as the pertinent provisions of law and jurisprudence, the Court denies the petition and affirms the questioned decision of the Court of Appeals.

The first and principal issue is the ownership of the two pieces of property subject of this action. Petitioner assails the validity of the deeds of conveyance over the same parcels of land. There is no dispute that the transfers of ownership from the original owners of the riceland and the house and lot, Corazon Ilomin and the spouses Cespedes, respectively, were valid.

The sale of the riceland on May 17, 1973, was made in favor of Miguel and Erlinda. The provision of law applicable here is Article 148 of the Family Code providing for cases of cohabitation when a man and a woman who are not capacitated to marry each other live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage. While Miguel and Erlinda contracted marriage on July 15, 1973, said union was patently void because the earlier marriage of Miguel and Carlina was still susbsisting and unaffected by the latters de facto separation.

Under Article 148, only the properties acquired by both of the parties through their actual joint contribution of money, property or industry shall be owned by them in common in proportion to their respective contributions. It must be stressed that actual contribution is required by this provision, in contrast to Article 147 which states that efforts in the care and maintenance of the family and household, are regarded as contributions to the acquisition of common property by one who has no salary or income or work or industry. If the actual contribution of the party is not proved, there will be no co-ownership and no presumption of equal shares.[9]

In the case at bar, Erlinda tried to establish by her testimony that she is engaged in the business of buy and sell and had a sari-sari store[10] but failed to persuade us that she actually contributed money to buy the subject

riceland. Worth noting is the fact that on the date of conveyance, May 17, 1973, petitioner was only around twenty years of age and Miguel Palang was already sixty-four and a pensioner of the U.S. Government. Considering her youthfulness, it is unrealistic to conclude that in 1973 she contributed P3,750.00 as her share in the purchase price of subject property,[11] there being no proof of the same.

Petitioner now claims that the riceland was bought two months before Miguel and Erlinda actually cohabited. In the nature of an afterthought, said added assertion was intended to exclude their case from the operation of Article 148 of the Family Code. Proof of the precise date when they commenced their adulterous cohabitation not having been adduced, we cannot state definitively that the riceland was purchased even before they started living together. In any case, even assuming that the subject property was bought before cohabitation, the rules of co-ownership would still apply and proof of actual contribution would still be essential.

Since petitioner failed to prove that she contributed money to the purchase price of the riceland in Binalonan, Pangasinan, we find no basis to justify her co-ownership with Miguel over the same. Consequently, the riceland should, as correctly held by the Court of Appeals, revert to the conjugal partnership property of the deceased Miguel and private respondent Carlina Palang.

Furthermore, it is immaterial that Miguel and Carlina previously agreed to donate their conjugal property in favor of their daughter Herminia in 1975. The trial court erred in holding that the decision adopting their compromise agreement in effect partakes the nature of judicial confirmation of the separation of property between spouses and the termination of the conjugal partnership.[12] Separation of property between spouses during the marriage shall not take place except by judicial order or without judicial conferment when there is an express stipulation in the marriage settlements.[13] The judgment which resulted from the parties compromise was not specifically and expressly for separation of property and should not be so inferred.

With respect to the house and lot, Erlinda allegedly bought the same for P20,000.00 on September 23, 1975 when she was only 22 years old. The testimony of the notary public who prepared the deed of conveyance for the property reveals the falsehood of this claim. Atty. Constantino Sagun

testified that Miguel Palang provided the money for the purchase price and directed that Erlindas name alone be placed as the vendee.[14]

The transaction was properly a donation made by Miguel to Erlinda, but one which was clearly void and inexistent by express provision of law because it was made between persons guilty of adultery or concubinage at the time of the donation, under Article 739 of the Civil Code. Moreover, Article 87 of the Family Code expressly provides that the prohibition against donations between spouses now applies to donations between persons living together as husband and wife without a valid marriage,[15] for otherwise, the condition of those who incurred guilt would turn out to be better than those in legal union.[16]

The second issue concerning Kristopher Palangs status and claim as an illegitimate son and heir to Miguels estate is here resolved in favor of respondent courts correct assessment that the trial court erred in making pronouncements regarding Kristophers heirship and filiation inasmuch as questions as to who are the heirs of the decedent, proof of filiation of illegitimate children and the determination of the estate of the latter and claims thereto should be ventilated in the proper probate court or in a special proceeding instituted for the purpose and cannot be adjudicated in the instant ordinary civil action which is for recovery of ownership and possession.[17]

As regards the third issue, petitioner contends that Kristopher Palang should be considered as party-defendant in the case at bar following the trial courts decision which expressly found that Kristopher had not been impleaded as party defendant but theorized that he had submitted to the courts jurisdiction through his mother/guardian ad litem.[18] The trial court erred gravely. Kristopher, not having been impleaded, was, therefore, not a party to the case at bar. His mother, Erlinda, cannot be called his guardian ad litem for he was not involved in the case at bar. Petitioner adds that there is no need for Kristopher to file another action to prove that he is the illegitimate son of Miguel, in order to avoid multiplicity of suits.[19] Petitioners grave error has been discussed in the preceeding paragraph where the need for probate proceedings to resolve the settlement of Miguels estate and Kristophers successional rights has been pointed out.

WHEREFORE, the instant petition is hereby DENIED. The questioned decision of the Court of Appeals is AFFIRMED. Costs against petitioner.

EDUARTE vs. COURT OF APPEALS

FACTS: Pedro Calapine was the registered owner of a parcel of land located in San Cristobal, San Pablo City, with an area of 12,199 square meters, as evidenced by Original Certificate of Title No. P-2129. On April 26, 1984, he executed a deed entitled Pagbibigay-Pala (Donacion Inter-Vivos) ceding one-half portion thereof to his niece Helen S. Doria.

On July 26, 1984, another deed identically entitled was purportedly executed by Pedro Calapine ceding unto Helen S. Doria the whole of the parcel of land covered by OCT No. P-2129), on the basis of which said original certificate was cancelled and in lieu thereof Transfer Certificate of Title No. T-23205 was issued in her name.

On February 26, 1986, Helen S. Doria donated a portion of 157 square meters of the parcel of land covered by TCT No. T-23205 to the Calauan Christian Reformed Church, Inc.

On March 25, 1988, Helen S. Doria sold, transferred and conveyed unto the spouses Romulo and Sally Eduarte the parcel of land covered by TCT No. T-24445, save the portion of 700 square meters on which the vendors house had been erected.

Claiming that his signature to the deed of donation was a forgery and that, she was unworthy of his liberality, Pedro Calapine brought suit against Helen S. Doria, the Calauan Christian Reformed Church, Inc. and the spouses Romulo and Sally Eduarte to revoke the donation made in favor of Helen S. Doria, to declare null and void the deeds of donation and sale that she had executed in favor of the Calauan Christian Reformed Church, Inc. and the spouses Romulo and Sally Eduarte and to cancel TCT Nos. T-24444, 24445 and T-27434.

The RTC rendered judgment in favor of plaintiff and against defendant Eduartes. On appeal, the Court dismissed petitioners appeal and affirmed the decision of the trial court..

ISSUE: WON there was a valid revocation of the first donation?

HELD: YES. All crimes which offend the donor show ingratitude and are causes for revocation. There is no doubt, therefore, that the donee who

commits adultery with the wife of the donor, gives cause for revocation by reason of ingratitude. The crimes against the person of the donor would include not only homicide and physical injuries, but also illegal detention, threats, and coercion; those against honor include offenses against chastity; and those against the property, include robbery, theft, usurpation, swindling, arson, damages, etc.

By falsifying Pedro Calapines signature, Helen Doria committed an act of ingratitude which is a valid ground for revocation of the donation made in her favor in accordance with Article 765 of the Civil Code.

EDUARTE vs. COURT OF APPEALS

A donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it.[1] On the part of the donor, it is an exercise of one’s generosity. However, on several occasions, instead of being accorded recognition and appreciation for this act of beneficence, the donor ends up as a victim of greed and ingratitude. This was the fate that befell Pedro Calapine (herein original plaintiff) constraining him to cause the revocation of the donation that he made to his niece in 1984. The instant petition for certiorari is interposed by the spouses Romulo and Sally Eduarte, assailing the decision of the Court of Appeals in CA-G.R. CV No. 29175 which affirmed the revocation of the donation made by Pedro Calapine to his niece, Helen Doria, and at the same time declared petitioners as purchasers in bad faith of the property donated.

As set out in the appealed decision, the undisputed facts are as follows:

Pedro Calapine was the registered owner of a parcel of land located in San Cristobal, San Pablo City, with an area of 12,199 square meters, as evidenced by Original Certificate of Title No. P-2129 (Exhibits A and 1). On April 26, 1984, he executed a deed entitled Pagbibigay-Pala (Donacion Inter-Vivos) ceding one-half portion thereof to his niece Helen S. Doria (Exhibit B).

On July 26, 1984, another deed identically entitled was purportedly executed by Pedro Calapine ceding unto Helen S. Doria the whole of the parcel of land covered by OCT No. P-2129 (Exhibits C and D), on the basis of which said original certificate was cancelled and in lieu thereof Transfer Certificate of Title No. T-23205 was issued in her name (Exhibits G and 2).

On February 26, 1986, Helen S. Doria donated a portion of 157 square meters of the parcel of land covered by TCT No. T-23205 to the Calauan Christian Reformed Church, Inc. (Exhibit H), on the basis of which said transfer certificate of title was cancelled and TCT No. T-24444 was issued in its name covering 157 square meters (Exhibit 2-A) and TCT No. T-24445, in the name of Helen S. Doria covering the remaining portion of 12,042 square meters (Exhibit 3).

On March 25, 1988, Helen S. Doria sold, transferred and conveyed unto the spouses Romulo and Sally Eduarte the parcel of land covered by TCT No. T-

24445, save the portion of 700 square meters on which the vendors house had been erected (Exhibits I and 3-F), on the basis of which TCT No. 24445 was cancelled and in lieu thereof TCT No. T-27434, issued in the name of the vendees (Exhibit 4).

Claiming that his signature to the deed of donation (Exhibits C and D) was a forgery and that, she was unworthy of his liberality, Pedro Calapine brought suit against Helen S. Doria, the Calauan Christian Reformed Church, Inc. and the spouses Romulo and Sally Eduarte to revoke the donation made in favor of Helen S. Doria (Exhibit B), to declare null and void the deeds of donation and sale that she had executed in favor of the Calauan Christian Reformed Church, Inc. and the spouses Romulo and Sally Eduarte (Exhibits H, I and 3-F) and to cancel TCT Nos. T-24444, 24445 and T-27434.

Answering the complaint, the defendants spouses denied knowledge of the first deed of donation and alleged that after a part of the property was donated to the defendant Calauan Christian Reformed Church, Inc., the remaining portion thereof was sold to them by the defendant Helen S. Doria; and that the plaintiffs purported signature in the second deed of donation was his own, hence genuine. They prayed that the complaint against them be dismissed; that upon their counterclaim, the plaintiff be ordered to pay them moral and exemplary damages and attorneys fees; and that upon their cross-claim the defendant Helen S. Doria be ordered to reimburse them the purchase price of P110,000 and to pay them moral and exemplary damages and attorneys fees (pp. 23-31, rec.).

The defendant Calauan Christian Reformed Church, Inc. manifested in its answer the willingness to reconvey to the plaintiff that part of the property donated to it by Helen S. Doria (pp. 36-38, rec.). And having executed the corresponding deed of reconveyance, the case as against it was dismissed(pp. 81-83; 84, rec.).

The defendants Helen S. Doria and the City Assessor and the Registrar of Deeds of San Pablo City did not file answers to the plaintiffs complaint.

After the plaintiffs death on August 27, 1989, on motion, he was substituted by his nephews Alexander and Artemis Calapine upon order of the Court (pp. 147-152; 250, rec.).

After trial, the Regional Trial Court, Fourth Judicial Region, Branch 30, San Pablo City rendered judgment, the dispositive part of which provides:

WHEREFORE, premises considered, judgment is hereby rendered by the Court in the instant case in favor of plaintiff and against defendant Eduartes to wit:

1. DECLARING as it is hereby declared, the revocation of the Deed of Donation dated April 26,1984;

2. ANNULLING, voiding, setting aside and declaring of no force and effect the Deed of Donation dated July 26, 1984, the deed of absolute sale executed on March 25, 1988 by and between spouses Eduartes and Helen Doria, and the Transfer Certificate of Title No-T-27434 issued under the name of spouses Romulo and Sally Eduarte;

3. ORDERING the office of the Register of Deeds, San Pablo City, to cancel TCT No. T-27434 or any other adverse title emanating from OCT No. P-2129 and in lieu thereof, to issue a new transfer certificate of title covering the subject property under the names of the substitute-plaintiffs Alexander and Artemis both surnamed Calapine, after payment of the corresponding fees and taxes therefor; and

4. ORDERING defendant Helen Doria to pay substitute-plaintiffs the sum of P20,000.00 as and for attorneys fees.

Judgment on the cross-claim of defendant Eduartes against Helen Doria is further rendered by ordering the latter to pay the former the sum of P110,000.00 with legal interest thereon starting from March 25, 1988 until full payment, and the further sum of P20,000.00 as and for attorneys fees.

The counterclaim of defendant Eduartes against plaintiff is hereby dismissed for lack of merit.

Costs against defendant Helen Doria in both the complaint and the cross-claim (pp. 11-12, decision, pp. 264-265, rec.).

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

1. In annulling, voiding, setting aside, and declaring of no force and effect -

(a) the deed of donation (Exhibits C and 1-A), dated July 26,1984;

(b) the deed of absolute sale (Exhibits 1 and 3-E) executed on March 25, 1988 by and between Spouses Eduartes and Helen Doria;

(c) TCT No. T-27434 (Exhibit 4) issued in the name of spouses Romulo Eduarte and Sally Eduarte; and in revoking the deed of donation (Exhibit B) dated April 26,1984;

2. In declaring the appellants Eduartes buyers in bad faith;

3. In not finding the plaintiffs guilty of estoppel by silence and/or guilty of suppression of evidence instead of finding the appellants Eduartes guilty of suppression of evidence; and

4. In finding that the signature of Pedro Calapine in the deed of donation (Exhibits C and 1-A) dated July 26,1984 a forgery based on the opposite findings of the handwriting experts presented by each party and in the absence of the testimony of Pedro Calapine who was then still alive (pp. 1-2, appellants brief.)[2]

In its decision dated April 22, 1992,[3] respondent Court of Appeals dismissed petitioners appeal and affirmed the decision of the trial court. Respondent court was in complete accord with the trial court in giving more credence to the testimony of private respondents expert witness, NBJ document examiner Bienvenido Albacea, who found Pedro Calapines signature in the second deed of donation to be a forgery. It also ruled that by falsifying Pedro Calapines signature, Helen Doria committed an act of ingratitude which is a valid ground for revocation of the donation made in her favor in accordance with Article 765 of the Civil Code. Furthermore, respondent court upheld the trial courts finding that petitioners are not buyers in good faith of the donated property as they failed to exercise due diligence in verifying the true ownership of the property despite the existence of circumstances that should have aroused their suspicions.

Petitioners are now before us taking exception to the foregoing findings of respondent Court of Appeals and contending that the same are not in accord with the law and evidence on record.

Anent the revocation of the first deed of donation, petitioners submit that paragraph (1) of Article 765 of the Civil Code does not apply in this case because the acts of ingratitude referred to therein pertain to offenses committed by the donee against the person or property of the donor. Petitioners argue that as the offense imputed to herein donee Helen Doria - falsification of a public document - is neither a crime against the person nor property of the donor but is a crime against public interest under the Revised Penal Code, the same is not a ground for revocation.

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

Offense against Donor - x x x. The crimes against the person of the donor would include not only homicide and physical injuries, but also illegal detention, threats and coercion; and those against honor include offenses against chastity and those against the property, include robbery, theft, usurpation, swindling, arson, damages, etc. (5 Manresa 175-176).[4]

This assertion, however, deserves scant consideration. The full text of the very same commentary cited by petitioners belies their claim that falsification of the deed of donation is not an act of ingratitude, to wit:

Offense Against Donor. All crimes which offend the donor show ingratitude and are causes for revocation. There is no doubt, therefore, that the donee who commits adultery with the wife of the donor, gives cause for revocation by reason of ingratitude. The crimes against the person of the donor would include not only homicide and physical injuries, but also illegal detention, threats, and coercion; those against honor include offenses against chastity; and those against the property, include robbery, theft, usurpation, swindling, arson, damages, etc. [Manresa 175-176].[5] (Italics supplied).

Obviously, the first sentence was deleted by petitioners because it totally controverts their contention. As noted in the aforecited opinion all crimes which offend the donor show ingratitude and are causes for revocation. Petitioners attempt to categorize the offenses according to their classification under the Revised Penal Code is therefore unwarranted considering that illegal detention, threats and coercion are considered as crimes against the person of the donor despite the fact that they are

classified as crimes against personal liberty and security under the Revised Penal Code.[6]

Petitioners also impute grave error to respondent Court of Appeals in finding that the second deed of donation dated July 26, 1984 was falsified. Petitioners deplore the fact that more credence was given to the testimony of the NBI handwriting expert who found Pedro Calapines signature in the second deed of donation to be a forgery despite the existence of controverting testimony by PC-INP Crime Laboratory (PCCL) Chief Document Examiner which petitioners adduced as evidence on their part.

We are not persuaded. Respondent Court of Appeals and the trial court cannot be faulted for giving more weight and credence to the testimony of the NBI handwriting expert considering that the examination of the said witness proved to be complete, thorough and scientific.

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

We have held that the value of the opinion of a handwriting expert depends not upon his mere statements of whether a writing is genuine or false, but upon the assistance he may afford in pointing out distinguishing marks, characteristics and discrepancies in and between genuine and false specimens of writing which would ordinarily escape notice or detection from an unpracticed observer. The test of genuineness ought to be the resemblance, not the formation of letters in some other specimens but to the general character of writing, which is impressed on it as the involuntary and unconscious result of constitution, habit or other permanent course, and is, therefore itself permanent.[7]

Confronted with contradicting testimonies from two handwriting experts, the trial court and respondent Court of Appeals were convinced by the opinion of the NB! handwriting expert as it was more exhaustive, in contrast with the testimony of petitioners witness from the PCCL which was discarded on account of the following flaws:

The Court is not convinced with Cruzs explanations. Apart from the visual inconsistencies, i.e., the strokes with which some letters were made, the variety in the sizes of the letters, the depth, the difference in the slant which the Court itself observed in its own examination of both the questioned

signatures and those standard specimen signatures, there is evidence showing that Cruz did not make a thorough examination of all the signatures involved in this particular issue. Thus even in the report submitted by the PCCL it was admitted that they omitted or overlooked the examination of at least three (3) standard specimen signatures of Pedro Calapine which were previously subject of the NBI examination marked as Exhibits S-9, S-10 and S-il. When questioned regarding this oversight, Cruz testified that in his opinion, the inclusion or non-inclusion of said exhibits in their examination will not affect the same and they would have arrived at the same conclusion anyway. Again, when asked why they did not bother to have the original copies of the documents being questioned (Exhs. Q-1 through Q-3) for their examination, Cruz replied that they are using a special film so it will not matter whether the documents being examined are the original or a mere photocopy (TSN 8, 10, 12 and 26, Hearing of Nov. 23, 1989).

The Court will not attempt to make its own conclusion or resolution on such a technical issue as the matter at hand in the light of the cavalier attitude of Cruz. In fine, between the examinations made by the two witnesses, that of Albaceas proved to be complete, thorough and scientific and is worthy of credence and belief.[8]

The afore-quoted findings confirm beyond doubt the failure of petitioners expert witness to satisfy the above-mentioned criteria for evaluating the opinion of handwriting experts. At the same time, petitioners witness failed to rebut the convincing testimony of the NB! handwriting expert presented by private respondents. We therefore find no reason to deviate from the assailed conclusions as the same are amply supported by the evidence on record.

Finally, proceeding to the crucial issue that directly affects herein petitioners, it is reiterated that petitioners are buyers in good faith of the donated property, and therefore, it was grave error to annul and set aside the deed of sale executed between petitioners and donee Helen Doria.

In adjudging petitioners as buyers in bad faith, respondent Court of Appeals affirmed the trial courts finding that the attendant circumstances, that is, the presence of other occupants as well as houses built of strong materials and fruit bearing trees in the subject land, should have aroused the suspicion of petitioners and impelled them to exercise due diligence in

verifying the true ownership of the property being sold. Petitioners dispute the tower courts conclusion and argue that although there were other occupants in the subject property, no adverse claim was made by the latter as they were mere tenants therein, thus, petitioners were not obliged to make any further inquiry because the property being sold was covered by a certificate of title under Helen Dorias name.

We agree with petitioners. The rule is well-settled that mere possession cannot defeat the title of a holder of a registered torrens title to real property.[9] Moreover, reliance on the doctrine that a forged deed can legally be the root of a valid title is squarely in point in this case:

Although generally a forged or fraudulent deed is a nullity and conveys no title, however there are instances when such a fraudulent document may become the root of a valid title. One such instance is where the certificate of title was already transferred from the name of the true owner to the forger, and while it remained that way, the land was subsequently sold to an innocent purchaser. For then, the vendee had the right to rely upon what appeared in the certificate.

Where there was nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. If the rule were otherwise, the efficacy and conclusiveness of the certificate of title which the Torrens System seeks to insure would entirely be futile and nugatory.[10]

When herein petitioners purchased the subject property from Helen Doria, the same was already covered by TCT No. T-23205 under the latters name. And although Helen Dorias title was fraudulently secured, such fact cannot prejudice the rights of herein petitioners absent any showing that they had any knowledge or participation in such irregularity. Thus, they cannot be obliged to look beyond the certificate of title which appeared to be valid on its face and sans any annotation or notice of private respondents adverse claim. Contrary therefore to the conclusion of respondent Court, petitioners are purchasers in good faith and for value as they bought the disputed property without notice that some other person has a right or interest in such property, and paid a full price for the same at the time of the purchase

or before they had notice of the claim or interest of some other person in the property.[11]

Respondent Court therefore committed a reversible error when it affirmed the ruling of the trial court annulling and setting aside the deed of absolute sale dated March 25, 1988 between petitioners and Helen

Doria, as well as the Transfer Certificate of Title No. T-27434 issued under petitioners name, the established rule being that the rights of an innocent purchaser for value must be respected and protected notwithstanding the fraud employed by the seller in securing his title.[12]

!n this regard, it has been held that the proper recourse of the true owner of the property who was prejudiced and fraudulently dispossessed of the same is to bring an action for damages against those who caused or employed the fraud, and if the latter are insolvent, an action against the Treasurer of the Philippines may be filed for recovery of damages against the Assurance Fund.[13]

Conformably with the foregoing, having established beyond doubt that Helen Doria fraudulently secured her title over the disputed property which she subsequently sold to petitioners, Helen Doria should instead be adjudged liable to private respondents, and not to petitioners as declared by the trial court and respondent Court of Appeals, for the resulting damages to the true owner and original plaintiff, Pedro Calapine.

ACCORDINGLY, the petition is GRANTED and the appealed decision is hereby MODIF!ED. The portions of the decision of the Regional Trial Court of San Pablo City, Branch 30, as affirmed by the Court of Appeals in CA-G.R. CV No. 29175 which ordered the following:

xxx xxx xxx;

2. ANNULLING, voiding, setting aside and declaring of no force and effect x x x , the deed of absolute sale executed on March 25, 1988 by and between spouses Eduartes and Helen Doria, and the Transfer Certificate of Title No. T-27434 issued under the name of spouses Romulo and Sally Eduarte;

3. ORDERING the office of the Register of Deeds, San Pablo City, to cancel TCT No. T-27434 or any other adverse title emanating from OCT No. P-2129

and in lieu thereof, to issue a new transfer certificate of title covering the subject property under the names of the substitute-plaintiffs Alexander and Artemi s both surnamed Calapine, after payment of the corresponding fees and taxes therefor: and

4 xxx . xxx xxx

Judgnient on the cross-claim of defendant Eduartes against Helen Doria is further rendered by ordering the latter to pay the former the sum of P110,000.00 with legal interest thereon starting from March 25, 1988 until full payment, x x x.

are hereby REVERSED and SET ASIDE.

Instead, Helen Doria is hereby ordered to pay herein private respondents the sum of P110,000.00 with legal interest counted from March 25, 1988 until full payment, as damages for the resulting loss to original plaintiff Pedro Calapine.

In all other respects, the appealed decision is hereby affirmed.

SO ORDERED.

ELOY IMPERIAL vs. COURT OF APPEALS

FACTS: Leoncio Imperial was the registered owner of a 32,837-square meter parcel of land covered by Original Certificate of Title No. 200, also known as Lot 45 of the Cadastral Survey of Albay. Leoncio sold the said lot for P1.00 to his acknowledged natural son, petitioner herein, who then acquired title over the land and proceeded to subdivide it into several lots. Petitioner and private respondents admit that despite the contracts designation as one of Absolute Sale, the transaction was in fact a donation.

On July 28, 1953, or barely two years after the donation, Leoncio filed a complaint for annulment of the said Deed of Absolute Sale on the ground that he was deceived by petitioner herein into signing the said document. The dispute, however, was resolved through a compromise agreement.

Pending execution of the above judgment, Leoncio died, leaving only two heirs --- the herein petitioner, who is his acknowledged natural son, and an adopted son, Victor Imperial. Victor moved for execution of judgment which was granted.

Fifteen years thereafter, Victor died single and without issue, survived only by his natural father, Ricardo Villalon, who was a lessee of a portion of the disputed land. Four years hence, Ricardo died, leaving as his only heirs his two children, Cesar and Teresa Villalon.

Five years thereafter, Cesar and Teresa filed a complaint for annulment of the donation with the Regional Trial Court of Legazpi City. Petitioner moved to dismiss on the ground of res judicata, by virtue of the compromise judgment rendered by the Court of First Instance of Albay. The trial court granted the motion to dismiss, but the Court of Appeals reversed the trial courts order and remanded the case for further proceedings.

Cesar and Teresa filed an amended complaint in the same case for Annulment of Documents, Reconveyance and Recovery of Possession with the Regional Trial Court of Legazpi City, seeking the nullification of the Deed of Absolute Sale affecting the above property, on grounds of fraud, deceit and inofficiousness. It was alleged that petitioner caused Leoncio to execute the donation by taking undue advantage of the latter’s physical weakness and mental unfitness, and that the conveyance of said property in favor of

petitioner impaired the legitime of Victor Imperial, their natural brother and predecessor-in-interest.

The RTC held the donation to be inofficious and impairing the legitime of Victor, on the basis of its finding that at the time of Leoncios death, he left no property other than the 32,837-square meter parcel of land which he had donated to petitioner. The Court of Appeals affirmed the RTC Decision in toto.

ISSUE:

IMPERIAL vs. COURT OF APPEALS

Petitioner seeks to set aside the Decision of the Court of Appeals in C.A.-G.R. CV No. 31976[1], affirming the Decision of the Regional Trial Court of Legazpi City[2], which rendered inofficious the donation made by Leoncio Imperial in favor of herein petitioner, to the extent that it impairs the legitime of Victor Imperial, and ordering petitioner to convey to herein private respondents, heirs of said Victor Imperial, that portion of the donated land proportionate to Victor Imperials legitime.

Leoncio Imperial was the registered owner of a 32,837-square meter parcel of land covered by Original Certificate of Title No. 200, also known as Lot 45 of the Cadastral Survey of Albay. On July 7, 1951, Leoncio sold the said lot for P1.00 to his acknowledged natural son, petitioner herein, who then acquired title over the land and proceeded to subdivide it into several lots. Petitioner and private respondents admit that despite the contracts designation as one of Absolute Sale, the transaction was in fact a donation.

On July 28, 1953, or barely two years after the donation, Leoncio filed a complaint for annulment of the said Deed of Absolute Sale, docketed as Civil Case No. 1177, in the then Court of First Instance of Albay, on the ground that he was deceived by petitioner herein into signing the said document. The dispute, however, was resolved through a compromise agreement, approved by the Court of First Instance of Albay on November 3, 1961[3], under which terms: (1) Leoncio recognized the legality and validity of the rights of petitioner to the land donated; and (2) petitioner agreed to sell a designated 1,000-square meter portion of the donated land, and to deposit the proceeds thereof in a bank, for the convenient disposal of Leoncio. In case of Leoncios death, it was agreed that the balance of the deposit will be withdrawn by petitioner to defray burial costs.

On January 8, 1962, and pending execution of the above judgment, Leoncio died, leaving only two heirs --- the herein petitioner, who is his acknowledged natural son, and an adopted son, Victor Imperial. On March 8, 1962, Victor was substituted in place of Leoncio in the above-mentioned case, and it was he who moved for execution of judgment. On March 15, 1962, the motion for execution was duly granted.

Fifteen years thereafter, or on July 26, 1977, Victor died single and without issue, survived only by his natural father, Ricardo Villalon, who was a lessee

of a portion of the disputed land. Four years hence, or on September 25, 1981, Ricardo died, leaving as his only heirs his two children, Cesar and Teresa Villalon.

Five years thereafter, or sometime in 1986, Cesar and Teresa filed a complaint for annulment of the donation with the Regional Trial Court of Legazpi City, docketed as Civil Case No. 7646. Petitioner moved to dismiss on the ground of res judicata, by virtue of the compromise judgment rendered by the Court of First Instance of Albay. The trial court granted the motion to dismiss, but the Court of Appeals reversed the trial courts order and remanded the case for further proceedings.

On October 18, 1989, Cesar and Teresa filed an amended complaint in the same case, Civil Case No. 7646, for Annulment of Documents, Reconveyance and Recovery of Possession with the Regional Trial Court of Legazpi City, seeking the nullification of the Deed of Absolute Sale affecting the above property, on grounds of fraud, deceit and inofficiousness. In the amended complaint, it was alleged that petitioner caused Leoncio to execute the donation by taking undue advantage of the latters physical weakness and mental unfitness, and that the conveyance of said property in favor of petitioner impaired the legitime of Victor Imperial, their natural brother and predecessor-in-interest.[4]

In his Answer, petitioner: (1) alleged that Leoncio had conveyed sufficient property to Victor to cover his legitime, consisting of 563 hectares of agricultural land in Manito, Albay; (2) reiterated the defense of res judicata, and (3) raised the additional defenses of prescription and laches.

Plaintiff Cesar Villalon died on December 26, 1989, while the case was pending in the Regional Trial Court, and was substituted in this action by his sons, namely, Antonio, Roberto, Augusto, Ricardo and Cesar, Jr., all surnamed Villalon, and his widow, Esther H. Villalon.

The RTC held the donation to be inofficious and impairing the legitime of Victor, on the basis of its finding that at the time of Leoncios death, he left no property other than the 32,837-square meter parcel of land which he had donated to petitioner. The RTC went on further to state that petitioners allegation that other properties existed and were inherited by Victor was not substantiated by the evidence.[5]

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

Considering that the property donated is 32,837 square meters, one half of that or 16,418 square meters becomes the free portion of Leoncio which could be absorbed in the donation to defendant. The other half, which is also 16,418 square meters is where the legitime of the adopted son Victor Imperial has to be taken.

The proportion of the legitime of the legitimate child (including the adopted child) in relation to the acknowledged natural child (defendant) is 10 is to 5[,] with the acknowledged natural child getting of the legitime of the legitimate (adopted) child, in accordance with Art. 895 of the New Civil Code which provides:

The legitime of each of the acknowledged natural children and each of the natural children by legal fiction shall consist of one-half of the legitime of each of the legitimate children or descendants.

From the 16,418 square meters left (after the free portion has been taken) plaintiffs are therefore entitled to 10,940 square meters while defendant gets 5,420 square meters.[6]

The trial court likewise held that the applicable prescriptive period is 30 years under Article 1141 of the Civil Code[7], reckoned from March 15, 1962, when the writ of execution of the compromise judgment in Civil Case 1177 was issued, and that the original complaint having been filed in 1986, the action has not yet prescribed. In addition, the trial court regarded the defense of prescription as having been waived, this not being one of the issues agreed upon at pre-trial.

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

WHEREFORE, premises considered, the Deed of Absolute Sale otherwise known as Doc. No. 8; Book No. 14; Page No. 1; Series of 1951 of the Notarial file of Pompeyo B. Calleja which is considered a donation, is hereby reduced proportionately insofar as it affected the legitime of the late Victor Imperial, which share is inherited by the plaintiffs herein, to the extent that plaintiffs are ordered to be given by defendant a portion of 10,940 square meters thereof.

In order to avoid further conflict, the 10,940 share to be given to plaintiffs should include the portion which they are presently occupying, by virtue of the extended lease to their father Ricardo Villalon, where the bungalow in question stands.

The remaining portion to be given to plaintiffs may come from any other portion that may be agreed upon by the parties, otherwise, this court will appoint a commissioner to undertake the partition.

The other 21,897 square meters should go to the defendant as part of his legitime and by virtue of the reduced donation.

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

SO ORDERED.[8]

The Court of Appeals affirmed the RTC Decision in toto.

Before us, petitioner questions the following findings of respondent court: (1) that there was no res judicata, there being no identity of parties and cause of action between the instant case and Civil Case No. 1177; (2) that private respondents had a right to question the donation; (3) that private respondents action is barred by prescription, laches and estoppel; and (4) that the donation was inofficious and should be reduced.

It is an indispensable requirement in res judicata that there be, between the first and second action, identity of parties, of subject matter and of cause of action.[9] A perusal of the records leads us to conclude that there is no identity of parties and of cause of action as between Civil Case No. 1177 and Civil Case No. 7646. Civil Case No. 1177 was instituted by Leoncio in his capacity as donor of the questioned donation. While it is true that upon his death, Victor was substituted as plaintiff of the action, such does not alter the fact that Victors participation in the case was in representation of the interests of the original plaintiff, Leoncio. The purpose behind the rule on substitution of parties is to ensure that the deceased party would continue to be properly represented in the suit through the duly appointed legal representative of the estate[10], or his heir, as in this case, for which no court appointment is required.[11] Petitioners argument, therefore, that

there is substantial identity between Leoncio and private respondents, being heirs and successors-in-interest of Victor, is unavailing.

Moreover, Leoncios cause of action as donor of the property was fraud, purportedly employed upon him by petitioner in the execution of the donation. While the same circumstances of fraud and deceit are alleged in private respondents complaint, it also raises the additional ground of inofficiousness of donation.

Contrary to petitioners contentions, inofficiousness of donation does not, and could not, form part of Leoncios cause of action in Civil Case No. 1177. Inofficiousness as a cause of action may arise only upon the death of the donor, as the value of the donation will then be contrasted with the net value of the estate of the donor-deceased.[12]

Consequently, while in Civil Case No. 1177, Leoncio sought the revocation in full of the donation on ground of fraud, the instant case actually has two alternative causes of action. First, for fraud and deceit, under the same circumstances as alleged in Leoncios complaint, which seeks the annulment in full of the donation, and which the trial court correctly dismissed because the compromise agreement in Civil Case No. 1177 served as a ratification and waiver on the part of Leoncio of whatever defects in voluntariness and consent may have been attendant in the making of the donation. The second cause of action is the alleged inofficiousness of the donation, resulting in the impairment of Victors legitime, which seeks the annulment, not of the entire donation, but only of that portion diminishing the legitime.[13] It is on the basis of this second cause of action that private respondents prevailed in the lower courts.

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

Only those who at the time of the donors death have a right to the legitime and their heirs and successors in interest may ask for the reduction of inofficious donations. xxx

As argued by petitioner, when Leoncio died on January 8, 1962, it was only Victor who was entitled to question the donation. However, instead of filing an action to contest the donation, Victor asked to be substituted as plaintiff

in Civil Case No. 1177 and even moved for execution of the compromise judgment therein.

No renunciation of legitime may be presumed from the foregoing acts. It must be remembered that at the time of the substitution, the judgment approving the compromise agreement has already been rendered. Victor merely participated in the execution of the compromise judgment. He was not a party to the compromise agreement.

More importantly, our law on succession does not countenance tacit repudiation of inheritance. Rather, it requires an express act on the part of the heir. Thus, under Article 1051 of Civil Code:

The repudiation of an inheritance shall be made in a public or authentic instrument, or by petition presented to the court having jurisdiction over the testamentary or intestate proceedings.

Thus, when Victor substituted Leoncio in Civil Case No. 1177 upon the latters death, his act of moving for execution of the compromise judgment cannot be considered an act of renunciation of his legitime. He was, therefore, not precluded or estopped from subsequently seeking the reduction of the donation, under Article 772. Nor are Victors heirs, upon his death, precluded from doing so, as their right to do so is expressly recognized under Article 772, and also in Article 1053:

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

Be that as it may, we find merit in petitioners other assignment of errors. Having ascertained this action as one for reduction of an inofficious donation, we cannot sustain the holding of both the trial court and the Court of Appeals that the applicable prescriptive period is thirty years, under Article 1141 of the Civil Code. The sense of both courts that this case is a real action over an immovable allots undue credence to private respondents description of their complaint, as one for Annulment of Documents, Reconveyance and Recovery of Possession of Property, which suggests the action to be, in part, a real action enforced by those with claim of title over the disputed land.

Unfortunately for private respondents, a claim for legitime does not amount to a claim of title. In the recent case of Vizconde vs. Court of Appeals[14], we declared that what is brought to collation is not the donated property itself, but the value of the property at the time it was donated. The rationale for this is that the donation is a real alienation which conveys ownership upon its acceptance, hence, any increase in value or any deterioration or loss thereof is for the account of the heir or donee.[15]

What, then, is the prescriptive period for an action for reduction of an inofficious donation? The Civil Code specifies the following instances of reduction or revocation of donations: (1) four years, in cases of subsequent birth, appearance, recognition or adoption of a child;[16] (2) four years, for non-compliance with conditions of the donation;[17] and (3) at any time during the lifetime of the donor and his relatives entitled to support, for failure of the donor to reserve property for his or their support.[18] Interestingly, donations as in the instant case,[19] the reduction of which hinges upon the allegation of impairment of legitime, are not controlled by a particular prescriptive period, for which reason we must resort to the ordinary rules of prescription.

Under Article 1144 of the Civil Code, actions upon an obligation created by law must be brought within ten years from the time the right of action accrues. Thus, the ten-year prescriptive period applies to the obligation to reduce inofficious donations, required under Article 771 of the Civil Code, to the extent that they impair the legitime of compulsory heirs.

From when shall the ten-year period be reckoned? The case of Mateo vs. Lagua, 29 SCRA 864, which involved the reduction for inofficiousness of a donation propter nuptias, recognized that the cause of action to enforce a legitime accrues upon the death of the donor-decedent. Clearly so, since it is only then that the net estate may be ascertained and on which basis, the legitimes may be determined.

It took private respondents 24 years since the death of Leoncio to initiate this case. The action, therefore, has long prescribed.

As for the trial courts holding that the defense of prescription had been waived, it not being one of the issues agreed upon at pre-trial, suffice it to say that while the terms of the pre-trial order bind the parties as to the matters to be taken up in trial, it would be the height of injustice for us to

adhere to this technicality when the fact of prescription is manifest in the pleadings of the parties, as well as the findings of fact of the lower courts.[20]

A perusal of the factual antecedents reveals that not only has prescription set in, private respondents are also guilty of estoppel by laches. It may be recalled that Leoncio died on January 8, 1962. Fifteen years later, Victor died, leaving as his sole heir Ricardo Villalon, who also died four years later. While Victor was alive, he gave no indication of any interest to contest the donation of his deceased father. As we have discussed earlier, the fact that he actively participated in Civil Case No. 1177 did not amount to a renunciation of his inheritance and does not preclude him from bringing an action to claim his legitime. These are matters that Victor could not possibly be unaware of, considering that he is a lawyer[21]. Ricardo Villalon was even a lessee of a portion of the donated property, and could have instituted the action as sole heir of his natural son, or at the very least, raised the matter of legitime by way of counterclaim in an ejectment case[22] filed against him by petitioner in 1979. Neither does it help private respondents cause that five years have elapsed since the death of Ricardo in 1981 before they filed their complaint with the RTC.

Estoppel by laches is the failure or neglect for an unreasonable or unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier, warranting a presumption that the person has abandoned his right or declined to assert it.[23] We find the necessity for the application of the principle of estoppel by laches in this case, in order to avoid an injustice.

A final word on collation of donations. We observe that after finding the donation to be inofficious because Leoncio had no other property at the time of his death, the RTC computed the legitime of Victor based on the area of the donated property. Hence, in its dispositive portion, it awarded a portion of the property to private respondents as Victors legitime. This was upheld by the Court of Appeals.

Our rules of succession require that before any conclusion as to the legal share due to a compulsory heir may be reached, the following steps must be taken: (1) the net estate of the decedent must be ascertained, by deducting all the payable obligations and charges from the value of the property

owned by the deceased at the time of his death; (2) the value of all donations subject to collation would be added to it.[24]

Thus, it is the value of the property at the time it is donated, and not the property itself, which is brought to collation. Consequently, even when the donation is found inofficious and reduced to the extent that it impaired Victors legitime, private respondents will not receive a corresponding share in the property donated. Thus, in this case where the collatable property is an immovable, what may be received is: (1) an equivalent, as much as possible, in property of the same nature, class and quality;[25] (2) if such is impracticable, the equivalent value of the impaired legitime in cash or marketable securities;[26] or (3) in the absence of cash or securities in the estate, so much of such other property as may be necessary, to be sold in public auction.[27]

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

ACCORDINGLY, the decision of the Court of Appeals in C.A. G.R. CV No. 31976, affirming in toto the decision of the Regional Trial Court in Civil Case No. 7646, is reversed and set aside. No costs.

SO ORDERED.