[G.R. No. 132964. February 18, 2000]

REPUBLIC OF THE PHILIPPINES, petitioner, vs. DAVID REY GUZMAN, represented by his Attorney-in-Fact, LOLITA G. ABELA, and the REGISTER OF DEEDS OF BULACAN, MEYCAUAYAN BRANCH, respondents.

D E C I S I O N

BELLOSILLO, J.:

The REPUBLIC OF THE PHILIPPINES seeks the nullification of the 5 March 1998 Decision of the Court of Appeals[1] which affirmed the dismissal by the Regional Trial Court, Br. 77, Malolos, Bulacan, of the petition for escheat filed by the Government.[2] h Y

David Rey Guzman, a natural-born American citizen, is the son of the spouses Simeon Guzman,[3] a naturalized American citizen, and Helen Meyers Guzman, an American citizen. In 1968 Simeon died leaving to his sole heirs Helen and David an estate consisting of several parcels of land located in Bagbaguin, Sta. Maria, Bulacan, covered by TCT Nos. T-146837 (M), T-146839 (M), T-146840 (M), T- 146841 (M), T-146842 (M), T-120254 (M) and T-120257 (M).

On 29 December 1970 Helen and David executed a Deed of Extrajudicial Settlement of the Estate of Simeon Guzman dividing and adjudicating to themselves all the property belonging to the estate of Simeon. The document of extrajudicial settlement was registered in the Office of the Register of Deeds on 8 December 1971. The taxes due thereon were paid through their attorneys-in-fact, Attys. Juan L. Austria and Lolita G. Abela, and the parcels of land were accordingly registered in the name of Helen Meyers Guzman and David Rey Guzman in undivided equal shares.

On 10 December 1981 Helen executed a Quitclaim Deed assigning, transferring and conveying to her son David her undivided one-half (1/2) interest on all the parcels of land subject matter of the Deed of Extrajudicial Settlement of the Estate of Simeon Guzman. Since the document appeared not to have been registered, upon advice of Atty. Lolita G. Abela, Helen executed another document, a Deed of Quitclaim, on 9 August 1989 confirming the earlier deed of quitclaim as well as modifying the document to encompass all her other property in the Philippines.[4]

On 18 October 1989 David executed a Special Power of Attorney where he acknowledged that he became the owner of the parcels of land subject of the Deed of Quitclaim executed by Helen on 9 August 1989 and empowering Atty. Lolita G. Abela to sell or otherwise dispose of the lots. On 1 February 1990 Atty. Lolita G.

Abela, upon instruction of Helen, paid donors taxes to facilitate the registry of the parcels of land in the name of David.

On 16 March 1994 a certain Atty. Mario A. Batongbacal wrote the Office of the Solicitor General and furnished it with documents showing that Davids ownership of the one-half (1/2) of the estate of Simeon Guzman was defective. On the basis thereof, the Government filed before the Regional Trial Court of Malolos Bulacan a Petition for Escheat praying that one-half (1/2) of David's interest in each of the subject parcels of land be forfeited in its favor. On 9 August 1994 David Rey Guzman responded with a prayer that the petition be dismissed. Sppedsc

On 11 July 1995 the trial court dismissed the petition holding that the two (2) deeds of quitclaim executed by Helen Meyers Guzman had no legal force and effect so that the ownership of the property subject thereof remained with her.[5]

The Government appealed[6] the dismissal of the petition but the appellate court affirmed the court a quo.

Petitioner anchors its argument on Art. XII of the Constitution which provides -

Sec. 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.

Sec. 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject to limitations provided by law.

Thus as a rule, only a Filipino citizen can acquire private lands in the Philippines. The only instances when a foreigner can acquire private lands in the Philippines are by hereditary succession and if he was formerly a natural-born Filipino citizen who lost his Philippine citizenship. Petitioner therefore contends that the acquisition of the parcels of land by David does not fall under any of these exceptions. It asserts that David being an American citizen could not validly acquire one-half (1/2) interest in each of the subject parcels of land by way of the two (2) deeds of quitclaim as they are in reality donations inter vivos. It also reasons out that the elements of donation are present in the conveyance made by Helen in favor of David: first, Helen consented to the execution of the documents; second, the dispositions were made in public documents; third, David manifested his acceptance of the donation in the Special Power of Attorney he executed in favor of Atty. Lolita G. Abela; fourth, the deeds were executed with the intention of benefiting David; and lastly, there was a

resultant decrease in the assets or patrimony of Helen, being the donor. Petitioner further argues that the payment of donors taxes on the property proved that Helen intended the transfer to be a gift or donation inter vivos.

David maintains, on the other hand, that he acquired the property by right of accretion and not by way of donation, with the deeds of quitclaim merely declaring Helens intention to renounce her share in the property and not an intention to donate. He further argues that, assuming there was indeed a donation, it never took effect since the Special Power of Attorney he executed does not indicate acceptance of the alleged donation. Calrsc

There are three (3) essential elements of a donation: (a) the reduction of the patrimony of the donor; (b) the increase in the patrimony of the donee; and, (c) the intent to do an act of liberality or animus donandi. When applied to a donation of an immovable property, the law further requires that the donation be made in a public document and that there should be an acceptance thereof made in the same deed of donation or in a separate public document.[7] In cases where the acceptance is made in a separate instrument, it is mandated that the donor should be notified thereof in an authentic form, to be noted in both instruments.[8]

Not all the elements of a donation of an immovable property are present in the instant case. The transfer of the property by virtue of the Deed of Quitclaim executed by Helen resulted in the reduction of her patrimony as donor and the consequent increase in the patrimony of David as donee. However, Helens intention to perform an act of liberality in favor of David was not sufficiently established. A perusal of the two (2) deeds of quitclaim reveals that Helen intended to convey to her son David certain parcels of land located in the Philippines, and to re-affirm the quitclaim she executed in 1981 which likewise declared a waiver and renunciation of her rights over the parcels of land. The language of the deed of quitclaim is clear that Helen merely contemplated a waiver of her rights, title and interest over the lands in favor of David, and not a donation. That a donation was far from Helen's mind is further supported by her deposition which indicated that she was aware that a donation of the parcels of land was not possible since Philippine law does not allow such an arrangement.[9] She reasoned that if she really intended to donate something to David it would have been more convenient if she sold the property and gave him the proceeds therefrom.[10] It appears that foremost in Helens mind was the preservation of the Bulacan realty within the bloodline of Simeon from where they originated, over and above the benefit that would accrue to David by reason of her renunciation.[11]The element of animus donandi therefore was missing.

Likewise, the two (2) deeds of quitclaim executed by Helen may have been in the nature of a public document but they lack the essential element of acceptance in

the proper form required by law to make the donation valid. We find no merit in petitioners argument that the Special Power of Attorney executed by David in favor of Atty. Lolita G. Abela manifests his implied acceptance of his mothers alleged donation as a scrutiny of the document clearly evinces the absence thereof. The Special Power of Attorney merely acknowledges that David owns the property referred to and that he authorizes Atty. Abela to sell the same in his name. There is no intimation, expressly or impliedly, that Davids acquisition of the parcels of land is by virtue of Helens possible donation to him and we cannot look beyond the language of the document to make a contrary construction as this would be inconsistent with the parol evidence rule.[12]

Moreover, it is mandated that if an acceptance is made in a separate public writing the notice of the acceptance must be noted not only in the document containing the acceptance but also in the deed of donation. Commenting on Art. 633 of the Civil Code from whence Art. 749[13] came Manresa said: "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 x x x x it is necessary that formal notice thereof be given to the donor, and the fact that due notice has been given must be noted in both instruments. Then and only then is the donation perfected.[14] "

Thus, in Santos v. Robledo we emphasized that when the deed of donation is recorded in the registry of property the document that evidences the acceptance - if this has not been made in the deed of gift - should also be recorded. And in one or both documents, as the case may be, the notification of the acceptance as formally made to the donor or donors should be duly set forth. [15] 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 noted in the deed of donation, and in the separate acceptance, the donation is null and void.[16]

These requisites, definitely prescribed by law, have not been complied with, and no proof of compliance appears in the record. The two (2) quitclaim deeds set out the conveyance of the parcels of land by Helen in favor of David but its acceptance by David does not appear in the deeds, nor in the Special Power of Attorney. Further, the records reveal no other instrument that evidences such acceptance and notice thereof to the donor in an authentic manner. It is well-settled that if the notification and notation are not complied with, the donation is void. Therefore, the provisions of the law not having been complied with, there was no effective conveyance of the parcels of land by way of donation inter vivos.[17] Scncm

However, the inexistence of a donation does not render the repudiation made by Helen in favor of David valid. There is no valid repudiation of inheritance as Helen

had already accepted her share of the inheritance when she, together with David, executed a Deed of Extrajudicial Settlement of the Estate of Simeon Guzman on 29 December 1970 dividing and adjudicating between the two (2) of them all the property in Simeons estate. By virtue of such extrajudicial settlement the parcels of land were registered in her and her sons name in undivided equal share and for eleven (11) years they possessed the lands in the concept of owner. Article 1056 of the Civil Code provides -

The acceptance or repudiation of an inheritance, once made is irrevocable and cannot be impugned, except when it was made through any of the causes that vitiate consent or when an unknown will appears.

Nothing on record shows that Helens acceptance of her inheritance from Simeon was made through any of the causes which vitiated her consent nor is there any proof of the existence of an unknown will executed by Simeon. Thus, pursuant to Art. 1056, Helen cannot belatedly execute an instrument which has the effect of revoking or impugning her previous acceptance of her one-half (1/2) share of the subject property from Simeons estate. Hence, the two (2) quitclaim deeds which she executed eleven (11) years after she had accepted the inheritance have no legal force and effect.

Nevertheless, the nullity of the repudiation does not ipso facto operate to convert the parcels of land into res nullius[18] to be escheated in favor of the Government. The repudiation being of no effect whatsoever the parcels of land should revert to their private owner, Helen, who, although being an American citizen, is qualified by hereditary succession to own the property subject of the litigation.

WHEREFORE, the assailed Decision of the Court of Appeals which sustained the Decision of the Regional Trial Court of Malolos, Bulacan, dismissing the petition for escheat is AFFIRMED. No costs.

SO ORDERED.

G.R. No. 77425 June 19, 1991

THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners, vs.HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA RIETA, represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents.

G.R. No. 77450 June 19, 1991

THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners, vs.HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA RIETA, represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents.

Severino C. Dominguez for petitioner Roman Catholic Bishop of Imus, Cavite.Dolorfino and Dominguez Law Offices for Sps. Ignao.Joselito R. Enriquez for private respondents.

REGALADO, J.:

These two petitions for review on certiorari1 seek to overturn the decision of the Court of Appeals in CA-G.R. CV No. 054562 which reversed and set aside the order of the Regional Trial Court of Imus, Cavite dismissing Civil Case No. 095-84, as well as the order of said respondent court denying petitioner's motions for the reconsideration of its aforesaid decision.

On November 29, 1984, private respondents as plaintiffs, filed a complaint for nullification of deed of donation, rescission of contract and reconveyance of real property with damages against petitioners Florencio and Soledad C. Ignao and the Roman Catholic Bishop of Imus, Cavite, together with the Roman Catholic Archbishop of Manila, before the Regional Trial Court, Branch XX, Imus, Cavite and which was docketed as Civil Case No. 095-84 therein.3

In their complaint, private respondents alleged that on August 23, 1930, the spouses Eusebio de Castro and Martina Rieta, now both deceased, executed a deed of donation in favor of therein defendant Roman Catholic Archbishop of Manila covering a parcel of land (Lot No. 626, Cadastral Survey of Kawit), located at Kawit, Cavite, containing an area of 964 square meters, more or less. The deed of donation allegedly provides that the donee shall not dispose or sell the property within a period of one hundred (100) years from the execution of the deed of donation, otherwise a violation of such condition would render ipso facto null and void the deed of donation and the property would revert to the estate of the donors.

It is further alleged that on or about June 30, 1980, and while still within the prohibitive period to dispose of the property, petitioner Roman Catholic Bishop of Imus, in whose administration all properties within the province of Cavite owned by the Archdiocese of Manila was allegedly transferred on April 26, 1962, executed a deed of absolute sale of the property subject of the donation in favor of petitioners Florencio and Soledad C. Ignao in consideration of the sum of P114,000. 00. As a consequence of the sale, Transfer Certificate of Title No. 115990 was issued by the Register of Deeds of Cavite on November 15, 1980 in the name of said petitioner spouses.

What transpired thereafter is narrated by respondent court in its assailed decision.4

On December 17, 1984, petitioners Florencio Ignao and Soledad C. Ignao filed a motion to dismiss based on the grounds that (1) herein private respondents, as plaintiffs therein, have no legal capacity to sue; and (2) the complaint states no cause of action.

On December 19, 1984, petitioner Roman Catholic Bishop of Imus also filed a motion to dismiss on three (3) grounds, the first two (2) grounds of which were identical to that of the motion to dismiss filed by the Ignao spouses, and the third ground being that the cause of action has prescribed.

On January 9, 1985, the Roman Catholic Archbishop of Manila likewise filed a motion to dismiss on the ground that he is not a real party in interest and, therefore, the complaint does not state a cause of action against him.

After private respondents had filed their oppositions to the said motions to dismiss and the petitioners had countered with their respective replies, with rejoinders thereto by private respondents, the trial court issued an order dated January 31, 1985, dismissing the complaint on the ground that the cause of action has prescribed.5

Private respondents thereafter appealed to the Court of Appeals raising the issues on (a) whether or not the action for rescission of contracts (deed of donation and deed of sale) has prescribed; and (b) whether or not the dismissal of the action for rescission of contracts (deed of donation and deed of sale) on the ground of prescription carries with it the dismissal of the main action for reconveyance of real property.6

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

WHEREFORE, the Order of January 31, 1985 dismissing appellants' complaint is SET ASIDE and Civil Case No. 095-84 is hereby ordered REINSTATED and REMANDED to the lower court for further proceedings. No Costs.7

Petitioners Ignao and the Roman Catholic Bishop of Imus then filed their separate motions for reconsideration which were denied by respondent Court of Appeals in its resolution dated February 6, 1987,8 hence, the filing of these appeals by certiorari.

It is the contention of petitioners that the cause of action of herein private respondents has already prescribed, invoking Article 764 of the Civil Code which provides that "(t)he donation shall be revoked at the instance of the donor, when the donee fails to comply with any of the conditions which the former imposed upon the latter," and that "(t)his action shall prescribe after four years from the non-compliance with the condition, may be transmitted to the heirs of the donor, and may be exercised against the donee's heirs.

We do not agree.

Although it is true that under Article 764 of the Civil Code an action for the revocation of a donation must be brought within four (4) years from the non-compliance of the conditions of the donation, the same is not applicable in the case at bar. The deed of donation involved herein expressly provides for automatic reversion of the property donated in case of violation of the condition therein, hence a judicial declaration revoking the same is not necessary, As aptly stated by the Court of Appeals:

By the very express provision in the deed of donation itself that the violation of the condition thereof would render ipso facto null and void the deed of donation, WE are of the opinion that there would be no legal necessity anymore to have the donation judicially declared null and void

for the reason that the very deed of donation itself declares it so. For where (sic) it otherwise and that the donors and the donee contemplated a court action during the execution of the deed of donation to have the donation judicially rescinded or declared null and void should the condition be violated, then the phrase reading "would render ipso facto null and void" would not appear in the deed of donation.9

In support of its aforesaid position, respondent court relied on the rule that a judicial action for rescission of a contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and conditions.10 It called attention to the holding that there is nothing in the law that prohibits the parties from entering into an agreement that a violation of the terms of the contract would cause its cancellation even without court intervention, and that it is not always necessary for the injured party to resort to court for rescission of the contract.11 It reiterated the doctrine that a judicial action is proper only when there is absence of a special provision granting the power of cancellation.12

It is true that the aforesaid rules were applied to the contracts involved therein, but we see no reason why the same should not apply to the donation in the present case. Article 732 of the Civil Code provides that donationsinter vivos shall be governed by the general provisions on contracts and obligations in all that is not determined in Title III, Book III on donations. Now, said Title III does not have an explicit provision on the matter of a donation with a resolutory condition and which is subject to an express provision that the same shall be considered ipso facto revoked upon the breach of said resolutory condition imposed in the deed therefor, as is the case of the deed presently in question. The suppletory application of the foregoing doctrinal rulings to the present controversy is consequently justified.

The validity of such a stipulation in the deed of donation providing for the automatic reversion of the donated property to the donor upon non-compliance of the condition was upheld in the recent case of De Luna, et al. vs. Abrigo, et al.13 It was held therein that said stipulation is in the nature of an agreement granting a party the right to rescind a contract unilaterally in case of breach, without need of going to court, and that, upon the happening of the resolutory condition or non-compliance with the conditions of the contract, the donation is automatically revoked without need of a judicial declaration to that effect. While what was the subject of that case was an onerous donation which, under Article 733 of the Civil Code is governed by the rules on contracts, since the donation in the case at bar is also subject to the same rules because of its provision on automatic revocation upon the violation of a resolutory condition, from parity of reasons said pronouncements in De Luna pertinently apply.

The rationale for the foregoing is that in contracts providing for automatic revocation, judicial intervention is necessary not for purposes of obtaining a judicial declaration rescinding a contract already deemed rescinded by virtue of an agreement providing for rescission even without judicial intervention, but in order to determine whether or not the rescission was proper.14

When a deed of donation, as in this case, expressly provides for automatic revocation and reversion of the property donated, the rules on contract and the general rules on prescription should apply, and not Article 764 of the Civil Code. Since Article 1306 of said Code authorizes the parties to a contract to establish such stipulations, clauses, terms and conditions not contrary to law, morals, good customs, public order or public policy, we are of the opinion that, at the very least, that stipulation of the parties providing for automatic revocation of the deed of donation, without prior judicial action for that purpose, is valid subject to the determination of the propriety of the rescission sought. Where such propriety is sustained, the decision of the court will be merely declaratory of the revocation, but it is not in itself the revocatory act.

On the foregoing ratiocinations, the Court of Appeals committed no error in holding that the cause of action of herein private respondents has not yet prescribed since an action to enforce a written contract prescribes in ten (10) years.15 It is our view that Article 764 was intended to provide a judicial remedy in case of non-fulfillment or contravention of conditions specified in the deed of donation if and when the parties have not agreed on the automatic revocation of such donation upon the occurrence of the contingency contemplated therein. That is not the situation in the case at bar.

Nonetheless, we find that although the action filed by private respondents may not be dismissed by reason of prescription, the same should be dismissed on the ground that private respondents have no cause of action against petitioners.

The cause of action of private respondents is based on the alleged breach by petitioners of the resolutory condition in the deed of donation that the property donated should not be sold within a period of one hundred (100) years from the date of execution of the deed of donation. Said condition, in our opinion, constitutes an undue restriction on the rights arising from ownership of petitioners and is, therefore, contrary to public policy.

Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property from the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of the property donated. Although the donor may impose certain conditions in the deed of donation, the same must not be contrary to law, morals, good customs, public order and public policy. The condition

imposed in the deed of donation in the case before us constitutes a patently unreasonable and undue restriction on the right of the donee to dispose of the property donated, which right is an indispensable attribute of ownership. Such a prohibition against alienation, in order to be valid, must not be perpetual or for an unreasonable period of time.

Certain provisions of the Civil Code illustrative of the aforesaid policy may be considered applicable by analogy.1âwphi1Under the third paragraph of Article 494, a donor or testator may prohibit partition for a period which shall not exceed twenty (20) years. Article 870, on its part, declares that the dispositions of the testator declaring all or part of the estate inalienable for more than twenty (20) years are void.

It is significant that the provisions therein regarding a testator also necessarily involve, in the main, the devolution of property by gratuitous title hence, as is generally the case of donations, being an act of liberality, the imposition of an unreasonable period of prohibition to alienate the property should be deemed anathema to the basic and actual intent of either the donor or testator. For that reason, the regulatory arm of the law is or must be interposed to prevent an unreasonable departure from the normative policy expressed in the aforesaid Articles 494 and 870 of the Code.

In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the property for an entire century, being an unreasonable emasculation and denial of an integral attribute of ownership, should be declared as an illegal or impossible condition within the contemplation of Article 727 of the Civil Code. Consequently, as specifically stated in said statutory provision, such condition shall be considered as not imposed. No reliance may accordingly be placed on said prohibitory paragraph in the deed of donation. The net result is that, absent said proscription, the deed of sale supposedly constitutive of the cause of action for the nullification of the deed of donation is not in truth violative of the latter hence, for lack of cause of action, the case for private respondents must fail.

It may be argued that the validity of such prohibitory provision in the deed of donation was not specifically put in issue in the pleadings of the parties. That may be true, but such oversight or inaction does not prevent this Court from passing upon and resolving the same.

It will readily be noted that the provision in the deed of donation against alienation of the land for one hundred (100) years was the very basis for the action to nullify the deed of d donation. At the same time, it was likewise the controverted fundament of the motion to dismiss the case a quo, which motion was sustained by the trial court and set aside by respondent court, both on the issue of prescription.

That ruling of respondent court interpreting said provision was assigned as an error in the present petition. While the issue of the validity of the same provision was not squarely raised, it is ineluctably related to petitioner's aforesaid assignment of error since both issues are grounded on and refer to the very same provision.

This Court is clothed with ample authority to review matters, even if they are not assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a just decision of the case:16 Thus, we have held that an unassigned error closely related to an error properly assigned,17 or upon which the determination of the question properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error.18

Additionally, we have laid down the rule that the remand of the case to the lower court for further reception of evidence is not necessary where the Court is in a position to resolve the dispute based on the records before it. On many occasions, the Court, in the public interest and for the expeditious administration of justice, has resolved actions on the merits instead of remanding them to the trial court for further proceedings, such as where the ends of justice, would not be subserved by the remand of the case.19 The aforestated considerations obtain in and apply to the present case with respect to the matter of the validity of the resolutory condition in question.

WHEREFORE, the judgment of respondent court is SET ASIDE and another judgment is hereby rendered DISMISSING Civil Case No. 095-84 of the Regional Trial Court, Branch XX, Imus, Cavite.

SO ORDERED.

G.R. No. 112127 July 17, 1995

CENTRAL PHILIPPINE UNIVERSITY, petitioner, vs.COURT OF APPEALS, REMEDIOS FRANCO, FRANCISCO N. LOPEZ, CECILIA P. VDA. DE LOPEZ, REDAN LOPEZ AND REMARENE LOPEZ, respondents.

BELLOSILLO, J.:

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

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

1. The land described shall be utilized by the CPU exclusively for the establishment and use of a medical college with all its buildings as part of the curriculum;

2. The said college shall not sell, transfer or convey to any third party nor in any way encumber said land;

3. The said land shall be called "RAMON LOPEZ CAMPUS", and the said college shall be under obligation to erect a cornerstone bearing that name. Any net income from the land or any of its parks shall be put in a fund to be known as the "RAMON LOPEZ CAMPUS FUND" to be used for improvements of said campus and erection of a building thereon. 1

On 31 May 1989, private respondents, who are the heirs of Don Ramon Lopez, Sr., filed an action for annulment of donation, reconveyance and damages against CPU alleging that since 1939 up to the time the action was filed the latter had not

complied with the conditions of the donation. Private respondents also argued that petitioner had in fact negotiated with the National Housing Authority (NHA) to exchange the donated property with another land owned by the latter.

In its answer petitioner alleged that the right of private respondents to file the action had prescribed; that it did not violate any of the conditions in the deed of donation because it never used the donated property for any other purpose than that for which it was intended; and, that it did not sell, transfer or convey it to any third party.

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

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

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

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

We find it difficult to sustain the petition. A clear perusal of the conditions set forth in the deed of donation executed by Don Ramon Lopez, Sr., gives us no alternative but to conclude that his donation was onerous, one executed for a valuable consideration which is considered the equivalent of the donation itself, e.g., when a

donation imposes a burden equivalent to the value of the donation. A gift of land to the City of Manila requiring the latter to erect schools, construct a children's playground and open streets on the land was considered an onerous donation. 3 Similarly, where Don Ramon Lopez donated the subject parcel of land to petitioner but imposed an obligation upon the latter to establish a medical college thereon, the donation must be for an onerous consideration.

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

The claim of petitioner that prescription bars the instant action of private respondents is unavailing.

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

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

this case, the starting point begins with the expiration of a reasonable period and opportunity for petitioner to fulfill what has been charged upon it by the donor.

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

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

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

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

WHEREFORE, the decision of the Regional Trial Court of Iloilo, Br. 34, of 31 May 1991 is REINSTATED and AFFIRMED, and the decision of the Court of Appeals of 18 June 1993 is accordingly MODIFIED. Consequently, petitioner is directed to reconvey to private respondents Lot No. 3174-B-1 of the subdivision plan Psd-1144 covered by Transfer Certificate of Title No. T-3910-A within thirty (30) days from the finality of this judgment.

Costs against petitioner.

SO ORDERED.CENTRAL PHIL UNIV. vs. Court of Appeals246 SCRA 511FACTS:In 1939, Don Ramon Lopez Sr. executed a deed of donation in favor of CPU together with the following conditions:a) The land should be utilized by CPU exclusively for the establishment & use of medical college;b) The said college shall not sell transfer or convey to any 3rd party;c) The said land shall be called “Ramon Lopez Campus” and any income from that land shall be put in the fund to be known as “Ramon Lopez Campus Fund”.However, on May 31, 1989, PR, who are the heirs of Don Ramon filed an action for annulment of donation, reconveyance & damages against CPU for not complying with the conditions. The heirs also argued that CPU had negotiated with the NHA to exchange the donated property with another land owned by the latter.Petitioner alleged that the right of private respondents to file the action had prescribed.ISSUE:1) WON petitioner failed to comply the resolutely conditions annotated at the back of petitioner’s certificate of title without a fixed period when to comply with such conditions? YES2) WON there is a need to fix the period for compliance of the condition? NOHELD:1)Under Art. 1181, on conditional obligations, the acquisition of rights as well the extinguishment or loss of those already acquired shall depend upon the happening of the event which constitutes the condition. Thus, when a person donates land to another on the condition that the latter would build upon the land a school is such a resolutory one. The donation had to be valid before the fulfillment of the condition. If there was no fulfillment with the condition such as what obtains in the instant case, the donation may be revoked & all rights which the donee may have acquired shall be deemed lost & extinguished.More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of the opportunity to comply with the condition even if it be

burdensome, to make the donation in its favor forever valid. But, unfortunately, it failed to do so. Hence, there is no more need to fix the duration of a term of the obligation when such procedure would be a mere technicality and formality and would serve no purpose than to delay or lead to an unnecessary and expensive multiplication of suits.Records are clear and facts are undisputed that since the execution of the deed of donation up to the time of filing of the instant action, petitioner has failed to comply with its obligation as donee. Petitioner has slept on its obligation for an unreasonable length of time. Hence, it is only just and equitable now to declare the subject donation already ineffective and, for all purposes, revoked so that petitioner as donee should now return the donated property to the heirs of the donor, private respondents herein, by means of reconveyance.2) Under Art. 1197, when the obligation does not fix a period but from its nature & circumstance it can be inferred that the period was intended, the court may fix the duration thereof because the fulfillment of the obligation itself cannot be demanded until after the court has fixed the period for compliance therewith & such period has arrived. However, this general rule cannot be applied in this case considering the different set of circumstances existing more than a reasonable period of 50yrs has already been allowed to petitioner to avail of the opportunity to comply but unfortunately, it failed to do so. Hence, there is no need to fix a period when such procedure would be a mere technicality & formality & would serve no purpose than to delay or load to unnecessary and expensive multiplication of suits.Under Art. 1191, when one of the obligors cannot comply with what is incumbent upon him, the obligee may seek rescission before the court unless there is just cause authorizing the fixing of a period. In the absence of any just cause for the court to determine the period of compliance there is no more obstacle for the court to decree recission.

[G.R. No. 140487. April 2, 2001]

REPUBLIC OF THE PHILIPPINES, petitioner, vs. LEON SILIM and ILDEFONSA MANGUBAT, respondents.

D E C I S I O N

KAPUNAN, J.:

Before the Court is a petition for review under Rule 45 seeking the reversal of the Decision of the Court of Appeals in CA-G.R. No. 43840, entitled Leon Silim, et al. vs. Wilfredo Palma, et al., which declared null and void the donation made by respondents of a parcel of land in favor of the Bureau of Public Schools, Municipality of Malangas, Zamboanga del Sur.

The antecedents of this case are as follows:

On 17 December 1971, respondents, the Spouses Leon Silim and Ildefonsa Mangubat, donated a 5,600 square meter parcel of land in favor of the Bureau of Public Schools, Municipality of Malangas, Zamboanga del Sur (BPS). In the Deed of Donation, respondents imposed the condition that the said property should be used exclusively and forever for school purposes only.[1] This donation was accepted by Gregorio Buendia, the District Supervisor of BPS, through an Affidavit of Acceptance and/or Confirmation of Donation.

Through a fund raising campaign spearheaded by the Parent-Teachers Association of Barangay Kauswagan, a school building was constructed on the donated land. However, the Bagong Lipunan school building that was supposed to be allocated for the donated parcel of land in Barangay Kauswagan could not be released since the government required that it be built upon a one (1) hectare parcel of land. To remedy this predicament, Assistant School Division Superintendent of the Province of Zamboanga del Sur, Sabdani Hadjirol, authorized District Supervisor Buendia to officially transact for the exchange of the one-half (1/2) hectare old school site of Kauswagan Elementary School to a new and suitable location which would fit the specifications of the government. Pursuant to this, District Supervisor Buendia and Teresita Palma entered into a Deed of Exchange whereby the donated lot was exchanged with the bigger lot owned by the latter. Consequently, the Bagong Lipunan school buildings were constructed on the new school site and the school building previously erected on the donated lot was dismantled and transferred to the new location.

When respondent Leon Silim saw, to his surprise, that Vice-Mayor Wilfredo Palma was constructing a house on the donated land, he asked the latter why he was building a house on the property he donated to BPS. Vice Mayor Wilfredo Palma replied that he is already the owner of the said property. Respondent Leon

Silim endeavored to stop the construction of the house on the donated property but Vice-Mayor Wilfredo Palma advised him to just file a case in court.

On February 10, 1982, respondents filed a Complaint for Revocation and Cancellation of Conditional Donation, Annulment of Deed of Exchange and Recovery of Possession and Ownership of Real Property with damages against Vice Mayor Wilfredo Palma, Teresita Palma, District Supervisor Buendia and the BPS before the Regional Trial Court of Pagadian City, Branch 21. In its Decision dated 20 August 1993, the trial court dismissed the complaint for lack of merit.[2] The pertinent portion of the decision reads:

Thus, it is the considered view of this Court that there was no breach or violation of the condition imposed in the subject Deed of Donation by the donee. The exchange is proper since it is still for the exclusive use for school purposes and for the expansion and improvement of the school facilities within the community. The Deed of Exchange is but a continuity of the desired purpose of the donation made by plaintiff Leon Silim.

In sum, it may be safely stated that the aforesaid transaction of exchange is a (sic) exception to the law invoked by the plaintiffs (Art. 764, Civil Code). The donee, being the State had the greater reciprocity of interest in the gratuitous and onerous contract of donation. It would be illogical and selfish for the donor to technically preclude the donee from expanding its school site and improvement of its school facilities, a paramount objective of the donee in promoting the general welfare and interests of the people of Barangay Kauswagan. But it is a well-settled rule that if the contract is onerous, such as the Deed of Donation in question, the doubt shall be settled in favor of the greatest reciprocity of interests, which in the instant case, is the donee.

x x x

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

1. Dismissing the complaint for lack of merit;

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

3. With costs against plaintiffs.

SO ORDERED.[3]

Not satisfied with the decision of the trial court, respondents elevated the case to the Court of Appeals. In its Decision dated 22 October 1999, the Court of Appeals reversed the decision of the trial court and declared the donation null and

void on the grounds that the donation was not properly accepted and the condition imposed on the donation was violated.[4]

Hence, the present case where petitioner raises the following issues:

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

II. WHETHER THE COURT OF APPEALS ERRED IN DECLARING THE DONATION NULL AND VOID DUE TO AN ALLEGED VIOLATION OF A CONDITION IN THE DONATION.[5]

The Court gives DUE COURSE to the petition.

Petitioner contends that the Court of Appeals erred in declaring the donation null and void for the reason that the acceptance was not allegedly done in accordance with Articles 745[6] and 749[7] of the New Civil Code.

We agree.

Donations, according to its purpose or cause, may be categorized as: (1) pure or simple; (2) remuneratory or compensatory; (3) conditional or modal; and (4) onerous. A pure or simple donation is one where the underlying cause is plain gratuity.[8] This is donation in its truest form. On the other hand, a remuneratory or compensatory donation is one made for the purpose of rewarding the donee for past services, which services do not amount to a demandable debt.[9] A conditional or modal donation is one where the donation is made in consideration of future services or where the donor imposes certain conditions, limitations or charges upon the donee, the value of which is inferior than that of the donation given. [10] Finally, an onerous donation is that which imposes upon the donee a reciprocal obligation or, to be more precise, this is the kind of donation made for a valuable consideration, the cost of which is equal to or more than the thing donated.[11]

Of all the foregoing classifications, donations of the onerous type are the most distinct. This is because, unlike the other forms of donation, the validity of and the rights and obligations of the parties involved in an onerous donation is completely governed not by the law on donations but by the law on contracts. In this regard, Article 733 of the New Civil Code provides:

Art. 733. Donations with an onerous cause shall be governed by the rules on contracts, and remuneratory donations by the provisions of the present Title as regards that portion which exceeds the value of the burden imposed.

The donation involved in the present controversy is one which is onerous since there is a burden imposed upon the donee to build a school on the donated property.[12]

The Court of Appeals held that there was no valid acceptance of the donation because:

xxx

Under the law the donation is void if there is no acceptance. The acceptance may either be in the same document as the deed of donation or in a separate public instrument. If the acceptance is in a separate instrument, "the donor shall be notified thereof in an authentic form, and his step shall be noted in both instruments.

"Title to immovable property does not pass from the donor to the donee by virtue of a deed of donation until and unless it has been accepted in a public instrument and the donor duly noticed thereof.(Abellera vs. Balanag, 37 Phils. 85; Alejandro vs. Geraldez, 78 SCRA 245). If the acceptance does not appear in the same document, it must be made in another. Solemn words are not necessary; it is sufficient if it shows the intention to accept, But in this case, it is necessary that formal notice thereof be given to the donor and the fact that due notice has been given it must be noted in both instruments (that containing the offer to donate and that showing acceptance). Then and only then is the donation perfected. (11 Manresa 155-11, cited in Vol. II, Civil Code of the Philippines by Tolentino.)."

This Court perused carefully the Deed of Donation marked as exhibit "A" and "1" to determine whether there was acceptance of the donation. This Court found none. We further examined the record if there is another document which embodies the acceptance, we found one. Although the Court found that in the offer of exhibits of the defendants, a supposed affidavit of acceptance and/or confirmation of the donation, marked as exhibit "8" appears to have been offered.

However, there is nothing in the record that the exhibits offered by the defendants have been admitted nor such exhibits appear on record.

Assuming that there was such an exhibit, the said supposed acceptance was not noted in the Deed of Donation as required under Art. 749 of the Civil Code. And according to Manresa, supra, a noted civilist, the notation is one of the requirements of perfecting a donation. In other words, without such a notation, the contract is not perfected contract. Since the donation is not perfected, the contract is therefore not valid.[13]

xxx

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

Sections 745 and 749 of the New Civil Code provide:

ART. 745. The donee must accept the donation personally, or through an authorized person with a special power for the purpose, or with a general and sufficient power; otherwise the donation shall be void.

ART. 749. In order that the donation of an immovable may be laid, it must be made in a public document, specifying therein the property donated and the value of the charge which the donee must satisfy.

The 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.

Private respondents, as shown above, admit that in the offer of exhibits by the defendants in the trial court, an affidavit of acceptance and/or confirmation of the donation, marked as Exhibit "8," was offered in evidence. However, private respondents now question this exhibit because, according to them "there is nothing in the record that the exhibits offered by the defendants have been admitted nor such exhibit appear on record."

Respondents' stance does not persuade. The written acceptance of the donation having been considered by the trial court in arriving at its decision, there is the presumption that this exhibit was properly offered and admitted by the court.

Moreover, this issue was never raised in the Court of Appeals. Nowhere in their brief did respondents question the validity of the donation on the basis of the alleged defect in the acceptance thereof. If there was such a defect, why did it take respondents more than ten (10) years from the date of the donation to question its validity? In the very least, they are guilty of estoppel.[14]

Respondents further argue that assuming there was a valid acceptance of the donation, the acceptance was not noted in the Deed of Donation as required in Article 749 of the Civil Code, hence, the donation is void.

The purpose of the formal requirement for acceptance of a donation is to ensure that such acceptance is duly communicated to the donor. Thus, in Pajarillo vs. Intermediate Appellate Court,[15] the Court held:

There is no question that the donation was accepted in a separate public instrument and that it was duly communicated to the donors. Even the petitioners cannot deny this. But what they do contend is that such acceptance was not "noted in both instruments," meaning the extrajudicial partition itself and the instrument of acceptance, as required by the Civil Code.

That is perfectly true. There is nothing in either of the two instruments showing that "authentic notice" of the acceptance was made by Salud to Juana and Felipe. And while the first instrument contains the statement that "the donee does hereby accept this donation and does hereby express her gratitude for the kindness and liberality of the donor," the only signatories thereof were Felipe Balane and Juana Balane de Suterio. That was in fact the reason for the separate instrument of acceptance signed by Salud a month later.

A strict interpretation of Article 633 can lead to no other conclusion that the annulment of the donation for being defective in form as urged by the petitioners. This would be in keeping with the unmistakable language of the above-quoted provision. However, we find that under the circumstances of the present case, a literal adherence to the requirement of the law might result not in justice to the parties but conversely a distortion of their intentions. It is also a policy of the Court to avoid such as interpretation.

The purpose of the formal requirement is to insure that the acceptance of the donation is duly communicated to the donor. In the case at bar, it is not even suggested that Juana was unaware of the acceptance for she in fact confirmed it later and requested that the donated land be not registered during her lifetime by Salud. Given this significant evidence, the Court cannot in conscience declare the donation ineffective because there is no notation in the extrajudicial settlement of the donee's acceptance. That would be placing too much stress on mere form over substance. It would also disregard the clear reality of the acceptance of the donation as manifested in the separate instrument dated June 20, 1946, and as later acknowledged by Juan.

In the case at bar, a school building was immediately constructed after the donation was executed. Respondents had knowledge of the existence of the school building put up on the donated lot through the efforts of the Parents-Teachers Association of Barangay Kauswagan. It was when the school building was being dismantled and transferred to the new site and when Vice-Mayor Wilfredo Palma was constructing a house on the donated property that respondents came to know of the Deed of Exchange. The actual knowledge by respondents of the construction and existence of the school building fulfilled the legal requirement that the acceptance of the donation by the donee be communicated to the donor.

On respondents' claim, which was upheld by the Court of Appeals, that the acceptance by BPS District Supervisor Gregorio Buendia of the donation was ineffective because of the absence of a special power of attorney from the Republic of the Philippines, it is undisputed that the donation was made in favor of the Bureau of Public Schools. Such being the case, his acceptance was authorized under Section 47 of the 1987 Administrative Code which states:

SEC. 47. Contracts and Conveyances. - Contracts or conveyances may be executed for and in behalf of the Government or of any of its branches, subdivisions, agencies, or instrumentalities, whenever demanded by the exigency or exigencies of the service and as long as the same are not prohibited by law.

Finally, it is respondents' submission that the donee, in exchanging the donated lot with a bigger lot, violated the condition in the donation that the lot be exclusively used for school purposes only.

What does the phrase "exclusively used for school purposes" convey? "School" is simply an institution or place of education.[16] "Purpose" is defined as "that which one sets before him to accomplish or attain; an end, intention, or aim, object, plan, project. Term is synonymous with the ends sought, an object to be attained, an intention, etc."[17] "Exclusive" means "excluding or having power to exclude (as by preventing entrance or debarring from possession, participation, or use); limiting or limited to possession, control or use.[18]

Without the slightest doubt, the condition for the donation was not in any way violated when the lot donated was exchanged with another one. The purpose for the donation remains the same, which is for the establishment of a school. The exclusivity of the purpose was not altered or affected. In fact, the exchange of the lot for a much bigger one was in furtherance and enhancement of the purpose of the donation. The acquisition of the bigger lot paved the way for the release of funds for the construction of Bagong Lipunan school building which could not be accommodated by the limited area of the donated lot.

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

SO ORDERED.

[G.R. No. 133705. March 31, 2005]

C-J YULO & SONS, INC., petitioner, vs. ROMAN CATHOLIC BISHOP OF SAN PABLO, INC., respondent.

D E C I S I O N

GARCIA, J.:

Appealed to this Court by way of a petition for review on certiorari are the Decision[1] dated December 19, 1997 and Resolution[2] dated April 30, 1998 of the Court of Appeals inCA-G.R. CV No. 45392, reversing an earlier decision of the Regional Trial Court at Calamba, Laguna, Branch 34, which ruled in favor of the herein petitioner C-J Yulo & Sons, Inc., in a suit for revocation of donation with reconveyance of title, thereat commenced by the petitioner against the herein respondent, Roman Catholic Bishop of San Pablo, Inc.

The facts are not at all disputed:

On September 24, 1977, petitioner donated unto respondent a parcel of land at Canlubang, Calamba, Laguna with an area of 41,117 square meters and registered in its name under Transfer Certificate of Title (TCT) No. T-82803. The deed of donation which also bears the acceptance of the donee recites the considerations therefor and the conditions thereto attached, to wit:

WHEREAS, Donee is a religious corporation engaged in much (sic) humanitarian Christian work in Laguna and elsewhere, educating and forming the young, caring for the infirm and the aged in the fulfillment of its mission;

WHEREAS, Donor recognizes the need for a privately endowed institution that will care for the homeless and destitute old people in the community, as well as the other senior citizens who for some reason or other find themselves without family with whom to live the last years of their life:

WHEREFORE, Donor is willing, in order to help establish and support such an institution to donate the land necessary for its housing, as well as an area of land whereon it may raise crops for its support and for the sustenance of its residents;

WHEREAS, Donee is willing and able, with the wanted help of Donor and of other benefactors, to establish, operate and maintain such a home for the aged.

NOW, THEREFORE, in consideration of all the foregoing premises, Donor hereby transfers and conveys to Donee by way of donation all its rights, title and interest in that certain parcel of land covered by TCT No. T-82803 of the Land Records of Laguna, the technical descriptions of which are recited above, subject to the following conditions and covenants, each of which is a material consideration for this Deed:

1. So much of the land as may be necessary shall be used for the construction of a home for the aged and infirm, regardless of religion or creed, but preferably those coming from Canlubang, Calamba, Laguna; provided that retired and/or aged priests may be admitted to the home; and provided further that any senior citizen from the area who has retired from business or work may likewise be admitted to the home, subject to the payment to the institution of such sum as he may afford for his support.

2. A Green Belt that is 15 meters wide shall be established and maintained by the Donor along the length of the land to separate and insulate it from the projected highway.

3. Such part of land as may not be needed for the residence and the Green Belt shall be devoted by Donee with the help of such residents of the home as are able, to the raising of agricultural crops for the consumption of the residents of the home, and of such other crops that may be sold to defray the cost of running the home and feeding its residents; provided, that should the area later become so fully urbanized as to make this limitation on use economically, impractical, any portion of the land may, with the written consent of the Donor, be put to commercial use by the Donee by leasing the same for wholesome and socially-acceptable activities; provided further that the rentals from such commercial leases shall be used, first, to meet the expenses of the home; second, to enlarge its population and expand its facilities; and finally for other charitable purposes in Laguna, in that order.

4. Donee acknowledges that Donors generous act will greatly aid Donee in accomplishing its mission on earth, and, recognizing the generosity of the Yulo family as the reason for such act, Donee undertakes to cause every year the celebration of masses for the intention of the various members of the family of Mr. Jose Yulo, Sr., on festive and solemn occasions in the said family.

5. Except with prior written consent of the Donor or its successor, the Donee shall not use the land except for the purpose as provided above in paragraph 1 hereof, nor sell or dispose the land for any reason whatsoever, nor convey any portion of

the same except in lease for commercial use as provided above in paragraph 3 hereof, otherwise the said land with all real improvements thereon shall revert in trust to the Donor for prompt disposition in favor of some other charitable organization that Donor may deem best suited to the care of the aged. (Underscoring supplied).

On the basis of the same deed, TCT No. T-82803 of the donor was cancelled and replaced by TCT No. T-91348 in the name of donee Roman Catholic Bishop of San Pablo, Inc.

Thereafter, or sometime in 1980, the donee, for purposes of generating funds to build the perimeter fence on the donated property and the construction of a nucleus building for the aged and the infirm, leased a portion of the donated property to one Martin Gomez who planted said portion with sugar cane. There is no dispute that the lease agreement was entered into by the donee without the prior written consent of the donor, as required in the deed of donation. The lease to Gomez ended in 1985.

The following year, 1986, a portion of the donated property was again leased by the donee, this time to one Jose Bostre who used the leased area as a ranch. As explained by the donee, it entered into a lease agreement with Bostre to protect the premises from vandals and for the electrification of the nucleus building of the home for the aged and in the infirm, which was named as Casa dela Merced. As before, however, the donee executed the lease contract without the prior written consent of the donor.

After the termination of the Bostre lease agreement, the donee, for the third time, leased a portion of the donated property to one Rudy Caballes who used the leased area for fattening cattles. The donee explained that the lease agreement with Bostre was also for the purposes of generating funds for the completion of Casa dela Merced. Again, however, the donee did not secure the prior written consent of the donor.

Hence, on September 20, 1990, pursuant to a board resolution, the donor, through its president Miguel A. Yulo, addressed a letter to the donee informing the latter that it was revoking the donation in accordance with Section 5 of the deed due to the donees non-compliance with and material breach of the conditions thereunder stipulated. In the same letter, the donor requested for the turn-over of the donees TCT No. T-91348 over the donated property.

In a reply-letter dated November 5, 1990, the donee, through Bishop Pedro N. Bantigue, D.D., denied any material breach of the conditions of the deed of donation and manifested its continued and faithful compliance with the provisions thereof. In the same letter, the donee refused the turn-over of its title to the donor.

It was against the foregoing backdrop of events when, on November 19, 1990, in the Regional Trial Court at Calamba, Laguna the donor, alleging non-compliance

with and violation by the donee of the conditions of the deed of donation, filed its complaint in this case against donee Roman Catholic Archbishop of San Pablo, Inc., therein reciting the imputed non-compliance and violations by the donee of the terms and conditions of the deed of donation, as follows:

a) non-construction of the home for the aged and infirmed in the lot despite the lapse of a reasonable and considerable length of time;

b) present land use of the area is a cattle farm, the owner of which has a lease contract with the donee; and

c) no prior written consent of the donor has been obtained for the present and actual use of the property donated,

and accordingly prayed that the subject deed of donation be adjudged revoked and void and the donee ordered to return and/or reconvey the property donated.

In its answer, defendant donee alleged that it was doing its best to comply with the provisions of the deed of donation relative to the establishment of the home for the aged and the infirm, adding that the leases of portions of the land were with the express, albeit unwritten consent, of Jesus Miguel Yulo himself. In the same answer, defendant donee interposed the defense that the donors cause of action for revocation, if any, had already prescribed because the leases were known to the latter since 1980.

In a decision dated December 22, 1995, the trial court rendered judgment for donor-plaintiff C-J Yulo & Sons, Inc., thus:

WHEREFORE, judgment is hereby rendered for plaintiff and against the defendant, declaring the Deed of Donation dated September 24, 1977 (Exh. C) REVOKED, affirming plaintiffs revocation of the same in the letter dated September 20, 1990 (Exh. D).

Defendant and all persons claiming rights under them are hereby ordered to immediately vacate the premises of the donated property and to hand over to plaintiff the peaceful possession of the aforesaid premises.

To avoid multiplicity of suits, the Register of Deeds of Calamba, Laguna, is hereby ordered to require the defendant to surrender Transfer Certificate of Title No. T-91348 (Exh. B) and thereafter cancel the same and issue, upon payment of the required fees, a new Transfer Certificate of Title in favor of plaintiffs, with cost against the defendant.

SO ORDERED.

Therefrom, donee-defendant Roman Catholic Bishop of San Pablo, Inc., went to the Court of Appeals in CA-G.R. CV No. 45392.

In the herein assailed Decision dated December 19, 1997,[3] the Court of Appeals reversed that of the trial court and upheld the donation in question, to wit:

WHEREFORE, the decision of the trial court dated December 22, 1993 is hereby REVERSED and the donation dated September 24, 1977 (Exhibit C) which conveyed title to the donated property in the appellees name is hereby UPHELD.

SO ORDERED.

Its motion for reconsideration having been denied by the same court in its Resolution of April 30, 1998,[4] donor C-J Yulo & Sons, Inc., has come to this Court via the present recourse on its sole submission that

THE RULING OF THE COURT OF APPEALS (THAT THE REVOCATION OF THE DONATION BY PETITIONER WAS IMPROPER) IS CONTRARY TO LAW AND APPLICABLE JURISPRUDENCE.

We DENY.

The Court of Appeals sustained the trial courts finding that the donation is an onerous one since the donee was burdened with the establishment on the donated property of a home for the aged and the infirm. It likewise agreed with the trial court that there were violations of the terms and conditions of the deed of donation when the donee thrice leased a portion of the property without the prior written consent of the donor. Likewise upheld by the appellate court is the ruling of the trial court that the prescriptive period of the donors right to revoke the donation is ten (10) years based on Article 1144 of the Civil Code, instead of four (4) years per Article 764 of the same Code, and therefore the action for revocation filed by the petitioner is not barred by prescription.

Even then, the Court of Appeals reversed the trial courts decision, the reversal being premised on the appellate courts finding that the breaches thrice committed by the respondent were merely casual breaches which nevertheless did not detract from the purpose of which the donation was made: the establishment of a home for the aged and the infirm.

We agree.

Petitioner contends that the case at bar is similar to the 1995 case of Central Philippine University vs. Court of Appeals,[5] where the donee failed for more than 50 years to establish, as required, a medical school on the land donated, and where this Court declared the donation to have been validly revoked.

To the mind of the Court, what is applicable to this case is the more recent [2001] case of Republic vs. Silim,[6] where respondent Silim donated a 5,600-square meter parcel of land in favor of the Bureau of Public Schools, Municipality of Malangas, Zamboanga del Sur with the condition that the said property should be used exclusively and forever for school purposes only. Although a school building was constructed on the property through the efforts of the Parent-Teachers Association of Barangay Kauswagan, the funds for a Bagong Lipunan school building could not be released because the government required that it be built on a one-hectare parcel of land. This led the donee therein to exchange the donated property for a bigger one.

In Silim, the Court distinguished the four (4) types of donations:

Donations, according to its purpose or cause, may be categorized as: (1) pure or simple; (2) remuneratory or compensatory; (3) conditional or modal; and (4) onerous. A pure or simple donation is one where the underlying cause is plain gratuity. This is donation in its truest form. On the other hand, a remuneratory or compensatory donation is one made for the purpose of rewarding the donee for past services, which services do not amount to a demandable debt. A conditional or modal donation is one where the donation is made in consideration of future services or where the donor imposes certain conditions, limitations or charges upon the donee, the value of which is inferior than that of the donation given. Finally, an onerous donation is that which imposes upon the donee a reciprocal obligation or, to be more precise, this is the kind of donation made for a valuable consideration, the cost of which is equal to or more than the thing donated.

Of all the foregoing classifications, donations of the onerous type are the most distinct. This is because, unlike the other forms of donation, the validity of and the rights and obligations of the parties involved in an onerous donation is completely governed not by the law on donations but by the law on contracts. In this regard, Article 733 of the New Civil Code provides:

ARTICLE 733 Donations with onerous cause shall be governed by the rules on contracts, and remuneratory donations by the provisions of the present Title as regards that portion which exceeds the value of the burden imposed.

The donation involved in the present controversy is one which is onerous since there is a burden imposed upon the donee to build a school on the donated property.

Here, the Court of Appeals correctly applied the law on contracts instead of the law on donations because the donation involved in this case is onerous, saddled as it is by a burden imposed upon the donee to put up and operate a home for the

aged and the infirm. We thus quote with approval the terse ruling of the appellate court in the challenged decision:

First, the violations of the conditions of the donation committed by the donee were merely casual breaches of the conditions of the donation and did not detract from the purpose by which the donation was made, i.e., for the establishment of a home for the aged and the infirm. In order for a contract which imposes a reciprocal obligation, which is the onerous donation in this case wherein the donor is obligated to donate a 41,117 square meter property in Canlubang, Calamba, Laguna on which property the donee is obligated to establish a home for the aged and the infirm (Exhibit C), may be rescinded per Article 1191 of the New Civil Code, the breach of the conditions thereof must be substantial as to defeat the purpose for which the contract was perfected (Tolentino, Civil Code of the Philippines, Vol. IV, pp. 179-180; Universal Food Corp. v. Court of Appeals, 33 SCRA 1, 18; Ocampo v. Court of Appeals, 233 SCRA 551, 562). Thus, in the case of Ocampo v. C.A. (ibid), citing the case of Angeles v. Calasanz (135 SCRA 323, 330), the Supreme Court ruled:

The right to rescind the contract for non-performance of one of its stipulations x x x is not absolute. In Universal Food Corp. v. Court of Appeals (33 SCRA 1) the Court stated that:

The general rule is that rescission of a contract will not be permitted for a slight or casual breach, but only for such substantial and fundamental breach as would defeat the very object of the parties in making the agreement (Song Fo & Co. v. Hawaiian-Philippine Co., 47 Phil. 821,827). The question of whether a breach of a contract is substantial depends upon the attendant circumstances (Corpus v. Hon. Alikpala, et al., L-23707 & L-23720, Jan. 17, 1968).

The above ruling of the Court of Appeals is completely in tune with this Courts disposition in Republic vs. Silim, supra. The donor therein sought to revoke the donation on the ground that the donee breached the condition to exclusively and forever use the land for school purpose only, but this Court ruled in favor of the donee:

Without the slightest doubt, the condition for the donation was not in any way violated when the lot donated was exchanged with another one. The purpose for the donation remains the same, which is for the establishment of a school. The exclusivity of the purpose was not altered or affected. In fact, the exchange of the lot for a much bigger one was in furtherance and enhancement of the purpose of the donation. The acquisition of the bigger lot paved way for the release of funds for the construction of Bagong Lipunan school building which could not be accommodated by the limited area of the donated lot.

As in Silim, the three (3) lease contracts herein entered into by the donee were for the sole purpose of pursuing the objective for which the donation was intended. In fact, such lease was authorized by the donor by express provision in the deed of donation, albeit the prior written consent therefor of the donor is needed. Hence, considering that the donees acts did not detract from the very purpose for which the donation was made but precisely to achieve such purpose, a lack of prior written consent of the donor would only constitute casual breach of the deed, which will not warrant the revocation of the donation.

Besides, this Court cannot consider the requirement of a prior written consent by the donor for all contracts of lease to be entered into by the donee as an absolute ground for revocation of the donation because such a condition, if not correlated with the purpose of the donation, would constitute undue restriction of the donees right of ownership over the donated property.

Instructive on this point is the ruling of this Court in The Roman Catholic Archbishop of Manila vs. Court of Appeals,[7] viz:

Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property from the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of the property donated. Although the donor may impose certain conditions in the deed of donation, the same must not be contrary to law, morals, good customs, public order and public policy.

x x x

In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the property for an entire century, being an unreasonable emasculation and denial of an integral attribute of ownership, should be declared as an illegal or impossible condition within the contemplation of Article 727 of the Civil Code. Consequently, as specifically stated in said statutory provision, such condition shall be considered as not imposed. No reliance may accordingly be placed on said prohibitory paragraph in the deed of donation. The net result is that, absent said proscription, the deed of sale supposedly constitutive of the cause of action for the nullification of the deed of donation is not in truth violative of the latter, hence, for lack of cause of action, the case for private respondents must fail.

If petitioner would insist that the lack of prior written consent is a resolutory condition that is absolute in character, the insistence would not stand the validity test under the foregoing doctrine. What would have been casual breaches of the terms and conditions of the donation, may, in that event, even be considered as no breach at all when the Court strikes down such absolute condition of prior written consent by the donor in all instances without any exception whatsoever. The Court, however, understands that such a condition was written with a specific purpose in mind, which is, to ensure that the primary objective for which the donation was

intended is achieved. A reasonable construction of such condition rather than totally striking it would, therefore, be more in accord with the spirit of the donation. Thus, for as long as the contracts of lease do not detract from the purpose for which the donation was made, the complained acts of the donee will not be deemed as substantial breaches of the terms and conditions of the deed of donation to merit a valid revocation thereof by the donor.

Finally, anent petitioners contention that the Court of Appeals failed to consider that respondent had abandoned the idea of constructing a home for the aged and infirm, the explanation in respondents comment is enlightening. Petitioner relies on Bishop Bantigues letter[8] dated June 21, 1990 as its basis for claiming that the donee had altogether abandoned the idea of constructing a home for the aged and the infirm on the property donated. Respondent, however, explains that the Bishop, in his letter, written in the vernacular, expressed his concern that the surrounding area was being considered to be re-classified into an industrial zone where factories are expected to be put up. There is no question that this will definitely be disadvantageous to the health of the aged and the infirm. Thus, the Bishop asked permission from the donor for a possible exchange or sale of the donated property to ultimately pursue the purpose for which the donation was intended in another location that is more appropriate.

The Court sees the wisdom, prudence and good judgment of the Bishop on this point, to which it conforms completely. We cannot accede to petitioners view, which attributed the exact opposite meaning to the Bishops letter seeking permission to sell or exchange the donated property.

In Silim, supra, this Court ruled that such exchange does not constitute breach of the terms and conditions of the donation. We see no reason for the Court to think otherwise in this case. To insist that the home for the aged and infirm be constructed on the donated property, if the industrialization indeed pushes through, defies rhyme and reason. Any act by the donor to prevent the donee from ultimately achieving the purpose for which the donation was intended would constitute bad faith, which the Court will not tolerate.

WHEREFORE, the instant petition is DENIED and the assailed decision of the Court of Appeals AFFIRMED in toto.

No pronouncement as to costs.

SO ORDERED.

C-J YULO & SONS, INC vs. ROMAN CATHOLIC BISHOP OF SAN PABLO, INC.[G.R. No. 133705. March 31, 2005]FACTS: On September 24, 1977, petitioner donated unto respondent a parcel of land at Canlubang, Calamba, Laguna on the condition that it shall be used for the construction of a home for the aged and infirm and for other charitable purposes

and cannot be used for any other purposes without the consent of the former said land with all real improvements thereon shall revert in otherwise trust to the Donor for prompt disposition in favor of some other charitable organization that Donor may deem best suited to the care of the aged.Thereafter, or sometime in 1980, the donee, for purposes of generating funds to build the perimeter fence on the donated property and the construction of a nucleus building for the aged and the infirm, leased a portion of the donated property to one Martin Gomez who planted said portion with sugar cane. There is no dispute that the lease agreement was entered into by the donee without the prior written consent of the donor, as required in the deed of donation. The lease to Gomez ended in 1985.The following year, 1986, a portion of the donated property was again leased by the donee, this time to one Jose Bostre who used the leased area as a ranch. As explained by the donee, it entered into a lease agreement with Bostre to protect the premises from vandals and for the electrification of the nucleus building of the home for the aged and in the infirm, which was named as “Casa dela Merced.” As before, however, the donee executed the lease contract without the prior written consent of the donor.After the termination of the Bostre lease agreement, the donee, for the third time, leased a portion of the donated property to one Rudy Caballes who used the leased area for fattening cattles. The donee explained that the lease agreement with Bostre was also for the purposes of generating funds for the completion of “Casa dela Merced.” Again, however, the donee did not secure the prior written consent of the donor.Hence, on September 20, 1990, pursuant to a board resolution, the donor, through its president Miguel A. Yulo, addressed a letter to the donee informing the latter that it was revoking the donation in accordance with Section 5 of the deed due to the donee’s non-compliance with and material breach of the conditions thereunder stipulated.ISSUE: W/N revocation is proper?HELD: NO. In Republic vs. Silim, where the donor sought to revoke the donation on the ground that the donee breached the condition to exclusively and forever use the land for school purpose only, the Court ruled in favor of the donee:Without the slightest doubt, the condition for the donation was not in any way violated when the lot donated was exchanged with another one. The purpose for the donation remains the same, which is for the establishment of a school. The exclusivity of the purpose was not altered or affected. In fact, the exchange of the lot for a much bigger one was in furtherance and enhancement of the purpose of the donation. The acquisition of the bigger lot paved way for the release of funds for the construction of Bagong Lipunan school building which could not be accommodated by the limited area of the donated lot.As in Silim, the three (3) lease contracts herein entered into by the donee were for the sole purpose of pursuing the objective for which the donation was intended. In fact, such lease was authorized by the donor by express provision in the deed of

donation, albeit the prior written consent therefor of the donor is needed. Hence, considering that the donee’s acts did not detract from the very purpose for which the donation was made but precisely to achieve such purpose, a lack of prior written consent of the donor would only constitute casual breach of the deed, which will not warrant the revocation of the donation.Besides, this Court cannot consider the requirement of a prior written consent by the donor for all contracts of lease to be entered into by the donee as an absolute ground for revocation of the donation because such a condition, if not correlated with the purpose of the donation, would constitute undue restriction of the donee’s right of ownership over the donated property.

SPOUSES ERNESTO and EVELYN SICAD, petitioners, vs. COURT OF APPEALS, CATALINO VALDERRAMA, JUDY CRISTINA M. VALDERRAMA and JESUS ANTONIO VALDERRAMA, respondents.

DECISION

NARVASA, C.J.:

The issue raised in the appeal by certiorari at bar centers on the character of a deed of donation executed by the late Aurora Virto Vda. De Montinola of the City of Iloilo as either inter vivos or mortis causa. That deed, entitled DEED OF DONATION INTER VIVOS,[1] was executed by Montinola on December 11, 1979. It named as donees her grandchildren, namely: Catalino Valderrama, Judy Cristina M. Valderrama and Jesus Antonio Valderrama; and treated of a parcel of land, Lot 3231 of the Cadastral Survey of Panay, Capiz, covered by Transfer Certificate Title No. T-16105 in the name of Montinola. The deed also contained the signatures of the donees in acknowledgment of the acceptance of the donation.

Montinolas Secretary, Gloria Salvilla, afterwards presented the deed for recording in the Property Registry, and the Register of Deeds cancelled TCT No. T-16105 (the donors title) and, in it place, issued TCT No. T-16622 on February 7, 1980, in the names of the donees.[2] Montinola however retained the owners duplicate copy of the new title (No. T-16622), as well as the property itself, until she transferred the same ten (10) years later, on July 10, 1990, to the spouses, Ernesto and Evelyn Sicad.

On March 12, 1987, Aurora Montinola drew up a deed of revocation of the donation,[3] and caused it to be annotated as an adverse claim on TCT No. T-16622 (issued, as aforestated, in her grandchildrens names). Then on August 24, 1990, she filed a petition with the Regional Trial Court in Roxas City for the cancellation of said TCT No. T-16622 and the reinstatement of TCT No. T-16105 (in her name), the case being docketed as Special Proceeding No. 3311. Her petition was founded on the theory that the donation to her three (3) grandchildren was one mortis causa which thus had to comply with the formalities of a will; and since it had not, the donation was void and could not effectively serve as basis for the cancellation of TCT No. T-16105 and the issuance in its place of TCT No. T-16622.

The donees (Montinolas grandchildren) opposed the petition. In their opposition dated August 29, 1990, they averred that the donation in their favor was one inter vivos which, having fully complied with the requirements therefor set out in Article 729 of the Civil Code, was perfectly valid and efficacious. They also expressed doubt about the sincerity of their grandmothers intention to recover the donated property, since she had not pursued the matter of its revocation after having it annotated as an adverse claim.

The case, originally treated as a special proceeding, was subsequently considered by the lower Court as an ordinary civil action in view of the allegations and issues raised in the pleadings. Pre-trial was had, followed by trial on the merits which was concluded with the filing of the parties memoranda. The Trial Court then rendered judgment on March 27, 1991, holding that the donation was indeed one inter vivos, and dismissing Aurora Montinolas petition for lack of merit. [4] The matter of its revocation was not passed upon.

Montinola elevated the case to the Court of Appeals, her appeal being docketed as CA-G.R. CV No. 33202. She however died on March 10, 1993,[5] while appeal was pending.

Shortly after Montinolas demise, a Manifestation and Motion dated March 31, 1993 was filed by Ernesto Sicad and Evelyn Bofill-Sicad, herein petitioners,[6] in which they (a) alleged that they had become the owners of the property covered by TCT No. T-16622 in virtue of a deed of definite sale dated May 25, 1992 accomplished by Montinola in their favor, which was confirmed by an affidavit dated November 26, 1997 also executed by the latter, and (b) prayed that they be substituted as appellants and allowed to prosecute the case in their own behalf.

Another motion was subsequently presented under date of April 7, 1993, this time by the legal heirs of Aurora Montinola, namely: Ofelia M. de Leon, Estela M. Jaen and Teresita M. Valderrma. They declared that they were not interested in pursuing the case, and asked that the appeal be withdrawn. Montinolas counsel opposed the motion.

On June 21, 1993, the Court of Appeals issued a Resolution: (a) ordering the substitution of the persons above mentioned Ofelia M. de Leon, Estela M. Jaen and Teresita M. Valderama as plaintiffs-appellant in place of the late Aurora Montinola, as well as the joinder of the spouses Ernesto and Evelyn Bofill-Sicad as additional appellants;[7] and (b) denying the motion for the withdrawal of the appeal.

On June 30, 1995, the Eighth Division of the Court of Appeals promulgated its Decision on the case affirming the judgment of the Regional Trial Court; [8] and on July 31, 1996, it denied the separate motions for reconsideration filed by Ofelia M. de Leon, Estela M. Jaen, and Teresita M. Valderrama, on the one hand, and by the spouses, Ernest and Evelyn Sicad, on the other.[9]

The Sicad Spouses have appealed to this Court; and here, they contend that the following errors were committed by the Appellate Tribunal, to wit:

1) ** in ruling that the donation was inter vivos and in not giving due weight to the revocation of the donation; and

2) ** in not ordering that the case be remanded for further reception of evidence.[10]

The Comment filed for private respondents (the donees) under date of December 19, 1996 deals with what they consider the principal issue in this case ** (i.e.) whether the donation is mortis causa or inter vivos and set forth the argument that the donor clearly intended to effect the immediate transfer of ownership to the donees, that the prohibition in the deed of donation against selling the property within ten (10) years after the death of the donor does not indicate that the donation is mortis causa, that the donors alleged act of physically keeping the title does not suggest any intention to defer the effectivity of the donation, that the payment of real property taxes is consistent with the donors reservation of the right of usufruct, that the donors intent is not determined by ** (her) self-serving post execution declarations, the donation was never effectively revoked, and petitioners have waived their right to question the proceedings in the trial court.[11]

The Reply of the Sicad Spouses dated March 14, 1997 reiterates their thesis that the donation was mortis causa, that the circumstances surrounding the execution of the deed, and the subsequent actions of the donor incontrovertibly signify the donors intent to transfer the property only after her death, that the donor did not intend to give effect to the donation, and that the procedure adopted by the Trial Court in the case was fatally defective.[12] A Rejoinder dated April 3, 1997 was then submitted by the Valderamas, traversing the assertions of the Reply.[13]

Considering the focus of the opposing parties, and their conflicting theories, on the intention of Aurora Montinola in executing the document entitled Deed of Donation Inter Vivos, it is needful to review the circumstances of the signing of that document by Montinola, as ostensible donor, and her grandchildren, as ostensible donees.

The evidence establishes that on December 11, 1979, when the deed of donation prepared by Montinols lawyer (Atty. Treas) was read and explained by the latter to the parties.Montinola expressed her wish that the donation take effect only after ten (10) years from her death, and that the deed include a prohibition on the sale of the poperty for such period.Accordingly, a new proviso was inserted in the deed reading: however, the donees shall not sell or encumber the properties herein donated within 10 years after the death of the donor.[14]The actuality of the subsequent insertion of this new proviso is apparent on the face of the instrument; the intercalation is easily perceived and identified it was clearly typed on a different machine, and is crammed into the space between the penultimate paragraph of the deed and that immediately preceding it.[15]

Not only did Aurora Montinola ordered the insertion in the deed of that restrictive proviso, but also, after recordation of the deed of donation, she never

stopped treating the property as her own. She continued, as explicitly authorized in the deed itself, to possess he property, enjoy its fruits and otherwise exercise the rights of dominion, paying the property taxes as they fell due all these she did until she transferred the property to the Sicad Spouses on July 10, 1990. She did not give the new certificate of title to the ostensible donees but retained too, until she delivered it to the Sicads on the occasion of the sale of the property to them. In any event, the delivery of the title to the donees would have served no useful purpose since, as just stated, they were prohibited to effect any sale or encumbrance thereof for a period of ten (10) years after the ostensible donors decease. And consistent with these acts denoting retention of ownership of the property was Montinolas openly expressed view that the donation was ineffectual and could not be given affect even after ten (10) years from her death. For this view she sought to obtain judicial approval. She brought suit on August 24, 1990 to cancel TCT no. T-16622 (issued to her grandchildren) premised precisely on the invalidity of the donation for failure to comply with the requisites of testamentary dispositions. Before that, she attempted to undo the conveyance to her grandchildren by execution a deed of revocation of the donation on March 12, 1987, and causing annotation thereof as an adverse claim on said TCT No. T-16622. She also exercised indisputable acts of ownership over said property by executing, as just stated, deeds intended to pass title over it to third parties petitioner herein.[16]

As already intimated, the real nature of a deed is to be ascertained by both its language and the intention of the parties as demonstrated by the circumstances attendant upon its execution. In this respect, case law has laid down significant parameters. Thus, in a decision handed down in 1946,[17] this Court construed a deed purporting to be a donation inter vivos to be in truth one mortis causa because it stipulated (like the one now being inquired into) that all rents, proceeds, fruits, of the donated properties shall remain for the exclusive benefit and disposal of the donor, Margarita David, during her lifetime; and that, without the knowledge and consent of the donor, the donated properties could not be disposed of in any way, whether by sale, mortgage, barter, or in any other way possible. On these essential premises, the Court said, such a donation must be deemed one mortis causa, because the combined effect of the circumstances surrounding the execution of the deed of donation and of the above-quoted clauses thereof ** (was that) the most essential elements of ownership the right to dispose of the donated properties and the right to enjoy the products, profits, possession remained with Margarita David during her lifetime, and would accrue to the donees only after Margarita Davids death. So, too, in the case at bar, did these rights remain with Aurora Montinola during her lifetime, and could not pass to the donees until ten (10) years after her death.

In another case decided in 1954 involving similar issue, Bonsato v. Court of Appeals,[18] this Court emphasized that the decisive characteristics of a donation mortis causa, which it had taken into account in David v. Sison, were that

the donor not only reserved for herself all the fruits of the property allegedly conveyed, but what is even more important, especially provided that without knowledge and consent of the donor, the donated properties could not be disposed of in any way,; thereby denying to the transferees the most essential attribute of ownership, the power to dispose of the properties.

A donation which purports to be one inter vivos but withholds form the donee that right to dispose of the donated property during the donors lifetime is in truth one mortis causa. In a donation mortis causa the right of disposition is not transferred to the donee while the donor is still alive.[19]

In the instant case, nothing of any consequence was transferred by the deed of donation in question to Montinolas grandchildren, the ostensible donees. They did not get possession of the property donated. They did not acquire the right to the fruits thereof, or any other right of dominion over the property. More importantly, they did not acquire the right to dispose of the property this would accrue to them only after ten (10) years from Montinolas death. Indeed, they never even laid hands on the certificate of title to the same. They were therefore simply paper owners of the donated property. All these circumstances, including, to repeat, the explicit provisions of the deed of donation reserving the exercise of rights of ownership to the donee and prohibiting the sale or encumbrance of the property until ten (10) years after her death ineluctably lead to the conclusion that the donation in question was a donation mortis causa, contemplating a transfer of ownership to the donees only after the donors demise.

The case of Alejandro v. Geraldez[20] cited by the Court of Appeals in support of its challenged judgment is not quite relevant. For in the deed of donation there in issue, there was a partial relinquishment of the right to dispose of the property, in the event only that this became necessary to defray the expenses and support of the donors. That limited right to dispose of the donated lots, said this Court, implies that ownership had passed to ** (the donees) by means of the donation and **, therefore, the donation was already effective during the donors lifetime. That is the characteristic of a donation inter vivos. On the other hand, in the case at bar, the donees were expressly prohibited to make any disposition of any nature or for any purpose whatever during the donors lifetime, and until ten (10) years after her death a prohibition which, it may be added, makes inapplicable the ruling in Castro v. Court of Appeals[21]where no such prohibition was imposed, and the donor retained only the usufruct over the property.

The Valderramas argument that the donation is inter vivos in character and that the prohibition against their disposition of the donated property is merely a condition which, if violated, would give cause for its revocation, begs the question. It assumes that they have the right to make a disposition of the property, which they do not. The argument also makes no sense, because if they had the right to dispose of the property and did in fact dispose of it to a third person, the

revocation of the donation they speak of would be of no utility or benefit to the donor, since such a revocation would not necessarily result in the restoration of the donors ownership and enjoyment of the property.

It is also error to suppose that the donation under review should be deemed one inter vivos simply because founded on considerations of love and affection. In Alejandro v. Geraldez,supra,[22] this Court also observed that the fact that the donation is given in consideration of love and affection ** is not a characteristic of donation inter vivos (solely) because transfersmortis causa may also be made for the same reason. Similarly, in Bonsato v. Court of Appeals, supra, this Court opined that the fact that the conveyance was due to the affection of the donor to the donees and services rendered by the latter,is of no particular significance in determining whether the deeds, Exh. 1 and 2, constitute transfers inter vivos or not, because a legacy may have identical motivation.[23]

Finally, it is germane to advert to the legal principle in Article 1378 of the Civil Code to the effect that in the case of doubt relative to a gratuitous contract, the construction must be that entailing the least transmission of rights and interests.[24]

The donation in question, though denominated inter vivos, is in truth one mortis causa; it is void because the essential requisites for its validity have not been complied with.

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 33202 dated June 30, 1995 as well as the Resolution denying reconsideration thereof and the Decision of the Regional Trial Court in Special Case No. 3311 are SET ASIDE. The Deed of Donation Inter Vivos (Exh. A) executed by Aurora Virto Vda. De Montinola on December 11, 1979 in favor of Catalino M. Valderrama, Judy Cristina M. Valderrama and Jesus Antonio M. Valderrama is declared null and void. The Register of Deed of Roxas City is directed to cancel Transfer Certificate of Title No. T-16622, revive and reinstate Transfer Certificate of Title No. T-16105.

SO ORDERED.

MA. ESTELA MAGLASANG, NICOLAS CABATINGAN and MERLY S. CABATINGAN, petitioners, vs. THE HEIRS OF CORAZON CABATINGAN, namely, LUZ M. BOQUIA, PERLA M. ABELLA, ESTRELLA M. CAETE, LOURDES M. YUSON, and JULIA L. MAYOL, HEIRS OF GENOVIVA C. NATIVIDAD namely, OSCAR C. NATIVIDAD, OLGA NATIVIDAD, ODETTE NATIVIDAD, OPHELIA NATIVIDAD, RICHARD NATIVIDAD, RAYMUND NATIVIDAD, RICHIE NATIVIDAD, SONIA NATIVIDAD and ENCARNACION CABATINGAN VDA. DE TRINIDAD, ALFREDO CABATINGAN and JESUSA C. NAVADA, respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Posed for resolution before the Court in this petition for review on certiorari filed under Rule 45 of the Rules of Court is the sole issue of whether the donations made by the late Conchita Cabatingan are donations inter vivos or mortis causa.

The facts of the case are as follows:

On February 17, 1992, Conchita Cabatingan executed in favor of her brother, petitioner Nicolas Cabatingan, a Deed of Conditional of Donation (sic) Inter Vivos for House and Lot covering one-half () portion of the formers house and lot located at Cot-cot, Liloan, Cebu.[1] Four (4) other deeds of donation were subsequently executed by Conchita Cabatingan on January 14, 1995, bestowing upon: (a) petitioner Estela C. Maglasang, two (2) parcels of land - one located in Cogon, Cebu (307 sq. m.) and the other, a portion of a parcel of land in Masbate (50,232 sq. m.); (b) petitioner Nicolas Cabatingan, a portion of a parcel of land located in Masbate (80,000 sq. m.); and (c) petitioner Merly S. Cabatingan, a portion of the Masbate property (80,000 sq. m.).[2] These deeds of donation contain similar provisions, to wit:

That for and in consideration of the love and affection of the DONOR for the DONEE, x x x the DONOR does hereby, by these presents, transfer, convey, by way of donation, unto the DONEE the above-described property, together with the buildings and all improvements existing thereon, to become effective upon the death of the DONOR; PROVIDED, HOWEVER, that in the event that the DONEE should die before the DONOR, the present donation shall be deemed automatically rescinded and of no further force and effect; x x x[3] (Emphasis Ours)

On May 9, 1995, Conchita Cabatingan died.

Upon learning of the existence of the foregoing donations, respondents filed with the Regional Trial Court of Mandaue, Branch 55, an action for Annulment

And/Or Declaration of Nullity of Deeds of Donations and Accounting, docketed as Civil Case No. MAN-2599, seeking the annulment of said four (4) deeds of donation executed on January 14, 1995. Respondents allege, inter alia, that petitioners,through their sinister machinations and strategies and taking advantage of Conchita Cabatingans fragile condition, caused the execution of the deeds of donation, and, that the documents are void for failing to comply with the provisions of the Civil Code regarding formalities of wills and testaments, considering that these are donations mortis causa.[4] Respondents prayed that a receiver be appointed in order to preserve the disputed properties, and, that they be declared as co-owners of the properties in equal shares, together with petitioner Nicolas Cabatingan.[5]

Petitioners in their Amended Answer, deny respondents allegations contending that Conchita Cabatingan freely, knowingly and voluntarily caused the preparation of the instruments. [6]

On respondents motion, the court a quo rendered a partial judgment on the pleadings on December 2, 1997 in favor of respondents, with the following dispositive portion:

WHEREREFORE, and in consideration of all the foregoing, judgment is hereby rendered in favor of the plaintiffs and against the defendant and unwilling co-plaintiff with regards (sic) to the four Deeds of Donation Annexes A, A-1, B and Annex C which is the subject of this partial decision by:

Declaring the four Deeds of Donation as null and void ab initio for being a donation Mortis Causa and for failure to comply with formal and solemn requisite under Art. 806 of the New Civil Code;

b) To declare the plaintiffs and defendants as well as unwilling co-plaintiff as the heirs of the deceased Conchita Cabatingan and therefore hereditary co-owners of the properties subject of this partial decision, as mandated under Art. 777 of the New Civil Code;

SO ORDERED.[7]

The court a quo ruled that the donations are donations mortis causa and therefore the four (4) deeds in question executed on January 14, 1995 are null and void for failure to comply with the requisites of Article 806 of the Civil Code on solemnities of wills and testaments.[8]

Raising questions of law, petitioners elevated the court a quos decision to this Court,[9] alleging that:

THE LOWER COURT PALPABLY DISREGARDED THE LONG-AND-WELL-ESTABLISHED RULINGS OF THIS HONORABLE SUPREME COURT ON THE CHARACTERIZATION OF DONATIONS AS INTER VIVOS OR MORTIS CAUSA AND, INSTEAD, PROCEEDED TO INTERPRET THE DONATIONS IN QUESTION IN A MANNER CONTRARY THERETO.[10]

Petitioners insist that the donations are inter vivos donations as these were made by the late Conchita Cabatingan in consideration of the love and affection of the donor for the donee, and there is nothing in the deeds which indicate that the donations were made in consideration of Cabatingans death. [11] In addition, petitioners contend that the stipulation on rescission in case petitioners die ahead of Cabatingan is a resolutory condition that confirms the nature of the donation as inter vivos.

Petitioners arguments are bereft of merit.

In a donation mortis causa, the right of disposition is not transferred to the donee while the donor is still alive.[12] In determining whether a donation is one of mortis causa, the following characteristics must be taken into account:

(1) It conveys no title or ownership to the transferee before the death of the transferor; or what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive;

(2) That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed;

and

(3) That the transfer should be void if the transferor should survive the transferee.[13]

In the present case, the nature of the donations as mortis causa is confirmed by the fact that the donations do not contain any clear provision that intends to pass proprietary rights to petitioners prior to Cabatingans death.[14] The phrase to become effective upon the death of the DONOR admits of no other interpretation but that Cabatingan did not intend to transfer the ownership of the properties to petitioners during her lifetime. Petitioners themselves expressly confirmed the donations as mortis causa in the following Acceptance and Attestation clauses, uniformly found in the subject deeds of donation, to wit:

That the DONEE does hereby accept the foregoing donation mortis causa under the terms and conditions set forth therein, and avail herself of this occasion to express her profound gratitude for the kindness and generosity of the DONOR.

x x x

SIGNED by the above-named DONOR and DONEE at the foot of this Deed of Donation mortis causa, which consists of two (2) pages x x x.[15]

That the donations were made in consideration of the love and affection of the donor does not qualify the donations as inter vivos because transfers mortis causa may also be made for the same reason.[16]

Well in point is National Treasurer of the Phils. v. Vda. de Meimban. [17] In said case, the questioned donation contained the provision:

"That for and in consideration of the love and affection which the DONOR has for the DONEE, the said Donor by these presents does hereby give, transfer, and convey unto the DONEE, her heirs and assigns a portion of ONE HUNDRED THOUSAND (100,000) SQUARE METERS, on the southeastern part Pro-indiviso of the above described property. (The portion herein donated is within Lot 2-B of the proposed amendment Plan Subdivision of Lots Nos. 1 and 2, Psu-109393), with all the buildings and improvements thereon, to become effective upon the death of the DONOR. (italics supplied.)" [18]

Notably, the foregoing provision is similar to that contained in the donation executed by Cabatingan. We held in Meimban case that the donation is a mortis causa donation, and that the above quoted provision establishes the donors intention to transfer the ownership and possession of the donated property to the donee only after the formers death. Further:

As the donation is in the nature of a mortis causa disposition, the formalities of a will should have been complied with under Article 728 of the Civil Code, otherwise, the donation is void and would produce no effect. As we have held in Alejandro v. Geraldez (78 SCRA 245,253), If the donation is made in contemplation of the donors death, meaning that the full or naked ownership of the donated properties will pass to the donee because of the donors death, then it is at that time that the donation takes effect, and it is a donation mortis causa which should be embodied in a last will and testament. (Citing Bonsato v. Court of Appeals, 95 Phil. 481).[19]

We apply the above rulings to the present case. The herein subject deeds expressly provide that the donation shall be rescinded in case petitioners predecease Conchita Cabatingan. As stated in Reyes v. Mosqueda,[20] one of the decisive characteristics of a donation mortis causa is that the transfer should be considered void if the donor should survive the donee. This is exactly what Cabatingan provided for in her donations. If she really intended that the donation should take effect during her lifetime and that the ownership of the properties donated be transferrred to the donee or independently of, and not by reason of her death, she would have not expressed such proviso in the subject deeds.

Considering that the disputed donations are donations mortis causa, the same partake of the nature of testamentary provisions[21] and as such, said deeds must be executed in accordance with the requisites on solemnities of wills and testaments under Articles 805 and 806 of the Civil Code, to wit:

ART. 805. Every will, other than a holographic will, must be subscribed at the end thereof by the testator himself or by the testators name written by some other person in his presence, and by his express direction, and attested and subscribed by three or more credible witnesses in the presence of the testator and of one another.

The testator or the person requested by him to write his name and the instrumental witnesses of the will, shall also sign, as aforesaid, each and every page thereof, except the last, on the left margin, and all the pages shall be numbered correlatively in letters placed on the upper part of each page.

The attestation shall state the number of pages used upon which the will is written , and the fact that the testator signed the will and every page thereof, or caused some other person to write his name, under his express direction, in the presence of the instrumental witnesses, and that the latter witnessed and signed the will and all the pages thereof in the presence of the testator and of one another.

If the attestation clause is in a language not known to the witnesses, it shall be interpreted to them. (n)

ART. 806. Every will must be acknowledged before a notary public by the testator and the witnesses. The notary public shall not be required to retain a copy of the will, or file another with the office of the Clerk of Court. (n)

The deeds in question although acknowledged before a notary public of the donor and the donee, the documents were not executed in the manner provided for under the above-quoted provisions of law.

Thus, the trial court did not commit any reversible error in declaring the subject deeds of donation null and void.

WHEREFORE, the petition is hereby DENIED for lack of merit.

SO ORDERED.

Ma. Estela Maglasang vs. Heirs of Corazon Cabatingan (G.R. No. 131953, June 5, 2002, 383 SCRA 6)

FACTS:

On February 17, 1992, Conchita Cabatingan executed in favor of her brother, petitioner Nicolas Cabatingan, a "Deed of Conditional of Donation (sic) Inter Vivos for House and Lot" covering one-half (½) portion of the former's house and lot located at Cot-cot, Liloan, Cebu. Four (4) other deeds of donation were subsequently executed by Conchita Cabatingan on January 14, 1995, bestowing upon petitioners Nicolas, Merly S. Cabatingan and Estela C. Maglasang for two parcels of land. One of the provisions in the deeds are as follows:

"That for and in consideration of the love and affection of the DONOR for the DONEE, the DONOR does hereby, by these presents, transfer, convey, by way of donation, unto the DONEE the above-described property, together with the buildings and all improvements existing thereon, to become effective upon the death of the DONOR; PROVIDED, HOWEVER, that in the event that the DONEE should die before the DONOR, the present donation shall be deemed automatically rescinded and of no further force and effect."

When Conchita died in May 9, 1995, and upon learning of the existence of the foregoing donations, respondents filed an action to annul the said four (4) deeds of donation. Respondents allege that petitioners, through their sinister machinations and strategies and taking advantage of Conchita Cabatingan's fragile condition, caused the execution of the deeds of donation, and, that the documents are void for failing to comply with the provisions of the Civil Code regarding formalities of wills and testaments, considering that these are donations mortis causa. Petitioners deny respondents' allegations contending that Conchita Cabatingan freely, knowingly and voluntarily caused the preparation of the instruments. The lower court ruled in favor of the respondents, while the

ISSUE:Whether the donations to the petitioners are donations mortis causa or inter vivos.

HELD:Petitioners insist that the donations are inter vivos donations as these were made by the late Conchita Cabatingan "in consideration of the love and affection of the donor" for the donee, and there is nothing in the deeds which indicate that the donations were made in consideration of Cabatingan's death.

Petitioners' arguments are bereft of merit.

In determining whether a donation is one of mortis causa, the following characteristics must be taken into account: (1) It conveys no title or ownership to the transferee before the death of the transferor; or what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive; (2) That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by

means of a reserved power in the donor to dispose of the properties conveyed; (3) That the transfer should be void if the transferor should survive the transferee.

In the present case, the nature of the donations as mortis causa is confirmed by the fact that the donations do not contain any clear provision that intends to pass proprietary rights to petitioners prior to Cabatingan's death. The phrase "to become effective upon the death of the DONOR" admits of no other interpretation but that Cabatingan did not intend to transfer the ownership of the properties to petitioners during her lifetime. Petitioners themselves expressly confirmed the donations as mortis causa in the Acceptance and Attestation clauses of the Deed of Donation.

That the donations were made "in consideration of the love and affection of the donor" does not qualify the donations as inter vivos because transfers mortis causa may also be made for the same reason.

Petition denied.

URSULINA GANUELAS, METODIO GANUELAS and ANTONIO GANUELAS, vs. HON. ROBERT T. CAWED, Judge of the Regional Trial Court of San Fernando, La Union (Branch 29), LEOCADIA G. FLORES, FELICITACION G. AGTARAP, CORAZON G. SIPALAY and ESTATE OF ROMANA GANUELAS DE LA ROSA, represented by GREGORIO DELA ROSA, Administrator, respondent.

D E C I S I O N

CARPIO-MORALES, J.:

The present petition for review under Rule 45 of the Rules of Court assails, on a question of law, the February 22, 1996 decision[1] of the Regional Trial Court of San Fernando, La Union, Branch 29, in Civil Case No. 3947, an action for declaration of nullity of a deed of donation.

The facts, as culled from the records of the case, are as follows:

On April 11, 1958, Celestina Ganuelas Vda. de Valin (Celestina) executed a Deed of Donation of Real Property[2] covering seven parcels of land in favor of her niece Ursulina Ganuelas (Ursulina), one of herein petitioners.

The pertinent provision of the deed of donation reads, quoted verbatim:

x x x

That, for and in consideration of the love and affection which the DONOR has for the DONEE, and of the faithful services the latter has rendered in the past to the former, the said DONOR does by these presents transfer and convey, by way of DONATION, unto the DONEE the property above, described, to become effective upon the death of the DONOR; but in the event that the DONEE should die before the DONOR, the present donation shall be deemed rescinded and of no further force and effect.

x x x.[3]

On June 10, 1967, Celestina executed a document denominated as Revocation of Donation[4] purporting to set aside the deed of donation. More than a month later or on August 18, 1967, Celestina died without issue and any surviving ascendants and siblings.

After Celestinas death, Ursulina had been sharing the produce of the donated properties with private respondents Leocadia G. Flores, et al., nieces of Celestina.

In 1982, or twenty-four years after the execution of the Deed of Donation, Ursulina secured the corresponding tax declarations, in her name, over the donated properties, to wit: Tax Declarations Nos. 18108, 18109, 18110, 18111, 18112, 18113

and 18114, and since then, she refused to give private respondents any share in the produce of the properties despite repeated demands.

Private respondents were thus prompted to file on May 26, 1986 with the RTC of San Fernando, La Union a complaint[5] against Ursulina, along with Metodio Ganuelas and Antonio Ganuelas who were alleged to be unwilling plaintiffs. The complaint alleged that the Deed of Donation executed by Celestina in favor of Ursulina was void for lack of acknowledgment by the attesting witnesses thereto before notary public Atty. Henry Valmonte, and the donation was a disposition mortis causa which failed to comply with the provisions of the Civil Code regarding formalities of wills and testaments, hence, it was void. The plaintiffs-herein private respondents thus prayed that judgment be rendered ordering Ursulina to return to them as intestate heirs the possession and ownership of the properties. They likewise prayed for the cancellation of the tax declarations secured in the name of Ursulina, the partition of the properties among the intestate heirs of Celestina, and the rendering by Ursulina of an accounting of all the fruits of the properties since 1982 and for her to return or pay the value of their shares.

The defendants-herein petitioners alleged in their Answer[6] that the donation in favor of Ursulina was inter vivos as contemplated under Article 729 of the Civil Code,[7] hence, the deed did not have to comply with the requirements for the execution of a valid will; the Revocation of Donation is null and void as the ground mentioned therein is not among those provided by law to be the basis thereof; and at any rate, the revocation could only be legally enforced upon filing of the appropriate complaint in court within the prescriptive period provided by law, which period had, at the time the complaint was filed, already lapsed.

By Decision of February 22, 1996, the trial court, holding that the provision in the Deed of Donation that in the event that the DONEE should predecease the DONOR, the donation shall be deemed rescinded and of no further force and effect is an explicit indication that the deed is a donation mortis causa,[8] found for the plaintiffs-herein private respondents, thus:

WHEREFORE the Court renders judgment declaring null and void the Deed of Donation of Real Property executed by Celestina Ganuelas, and orders the partition of the estate of Celestina among the intestate heirs.

SO ORDERED.[9]

The trial court also held that the absence of a reservation clause in the deed implied that Celestina retained complete dominion over her properties, thus supporting the conclusion that the donation is mortis causa,[10] and that while the deed contained an attestation clause and an acknowledgment showing the intent of the donor to effect a postmortem disposition, the acknowledgment was defective

as only the donor and donee appear to have acknowledged the deed before the notary public, thereby rendering the entire document void.[11]

Lastly, the trial court held that the subsequent execution by Celestina of the Revocation of Donation showed that the donor intended the revocability of the donation ad nutum, thus sustaining its finding that the conveyance was mortis causa.[12]

On herein petitioners argument that the Revocation of Donation was void as the ground mentioned therein is not one of those allowed by law to be a basis for revocation, the trial court held that the legal grounds for such revocation as provided under the Civil Code arise only in cases of donations inter vivos, but not in donations mortis causa which are revocable at will during the lifetime of the donor. The trial court held, in any event, that given the nullity of the disposition mortis causa in view of a failure to comply with the formalities required therefor, the Deed of Revocation was a superfluity.[13]

Hence, the instant petition for review, petitioners contending that the trial court erred:

I. . . . WHEN IT DECLARED NULL AND VOID THE DONATION EXECUTED BY CELESTINA GANUELAS;

II. . . . WHEN IT UPHELD THE REVOCATION OF DONATION;

III. . . . IN RENDERING ITS DECISION ADVERSE TO PETITIONER URSULINA GANUELAS.[14]

Petitioners argue that the donation contained in the deed is inter vivos as the main consideration for its execution was the donors affection for the donee rather than the donors death;[15]that the provision on the effectivity of the donationafter the donors deathsimply meant that absolute ownership would pertain to the donee on the donors death;[16] and that since the donation is inter vivos, it may be revoked only for the reasons provided in Articles 760,[17] 764[18] and 765[19] of the Civil Code.

In a letter of March 16, 1998,[20] private respondent Corazon Sipalay, reacting to this Courts January 28, 1998 Resolution requiring private respondents to SHOW CAUSE why they should not be disciplinarily dealt with or held in contempt for failure to submit the name and address of their new counsel, explains that they are no longer interested in pursuing the case and are willing and ready to waive whatever rights they have over the properties subject of the donation. Petitioners, who were required to comment on the letter, by Comment of October 28, 1998,[21] welcome private respondents gesture but pray that for the sake of enriching jurisprudence, their [p]etition be given due course and resolved.

The issue is thus whether the donation is inter vivos or mortis causa.

Crucial in the resolution of the issue is the determination of whether the donor intended to transfer the ownership over the properties upon the execution of the deed.[22]

Donation inter vivos differs from donation mortis causa in that in the former, the act is immediately operative even if the actual execution may be deferred until the death of the donor, while in the latter, nothing is conveyed to or acquired by the donee until the death of the donor-testator.[23] The following ruling of this Court in Alejandro v. Geraldez is illuminating:[24]

If the donation is made in contemplation of the donors death, meaning that the full or naked ownership of the donated properties will pass to the donee only because of the donors death, then it is at that time that the donation takes effect, and it is a donation mortis causa which should be embodied in a last will and testament.

But if the donation takes effect during the donors lifetime or independently of the donors death, meaning that the full or naked ownership (nuda proprietas) of the donated properties passes to the donee during the donors lifetime, not by reason of his death but because of the deed of donation, then the donation is inter vivos.

The distinction between a transfer inter vivos and mortis causa is important as the validity or revocation of the donation depends upon its nature. If the donation is inter vivos, it must be executed and accepted with the formalities prescribed by Articles 748[25] and 749[26] of the Civil Code, except when it is onerous in which case the rules on contracts will apply. If it is mortis causa, the donation must be in the form of a will, with all the formalities for the validity of wills, otherwise it is void and cannot transfer ownership.[27]

The distinguishing characteristics of a donation mortis causa are the following:

1. It conveys no title or ownership to the transferee before the death of the transferor; or, what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive;

2. That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed;

3. That the transfer should be void if the transferor should survive the transferee.[28]

In the donation subject of the present case, there is nothing therein which indicates that any right, title or interest in the donated properties was to be transferred to Ursulina prior to the death of Celestina.

The phrase to become effective upon the death of the DONOR admits of no other interpretation but that Celestina intended to transfer the ownership of the properties to Ursulina on her death, not during her lifetime.[29]

More importantly, the provision in the deed stating that if the donee should die before the donor, the donation shall be deemed rescinded and of no further force and effect shows that the donation is a postmortem disposition.

As stated in a long line of cases, one of the decisive characteristics of a donation mortis causa is that the transfer should be considered void if the donor should survive the donee.[30]

More. The deed contains an attestation clause expressly confirming the donation as mortis causa:

SIGNED by the above-named donor, Celestina Ganuelas, at the foot of this deed of donation mortis causa, consisting of two (2) pages and on the left margin of each and every page thereof in the joint presence of all of us who at her request and in her presence and that of each other have in like manner subscribed our names as witnesses.[31] (Emphasis supplied)

To classify the donation as inter vivos simply because it is founded on considerations of love and affection is erroneous. That the donation was prompted by the affection of the donor for the donee and the services rendered by the latter is of no particular significance in determining whether the deed constitutes a transfer inter vivos or not, because a legacy may have an identical motivation. [32] In other words, love and affection may also underline transfers mortis causa.[33]

In Maglasang v. Heirs of Cabatingan,[34] the deeds of donation contained provisions almost identical to those found in the deed subject of the present case:

That for and in consideration of the love and affection of the DONOR for the DONEE, x x x the DONOR does hereby, by these presents, transfer, convey, by way of donation, unto the DONEE the above-described property, together with the buildings and all improvements existing thereon, to become effective upon the death of the DONOR; PROVIDED, HOWEVER, that in the event that the DONEE should die before the DONOR, the present donation shall be deemed automatically rescinded and of no further force and effect. (Underscoring supplied)

In that case, this Court held that the donations were mortis causa, for the above-quoted provision conclusively establishes the donors intention to transfer the ownership and possession of the donated property to the donee only after the formers death. Like in the present case, the deeds therein did not contain any clear provision that purports to pass proprietary rights to the donee prior to the donors death.

As the subject deed then is in the nature of a mortis causa disposition, the formalities of a will under Article 728 of the Civil Code should have been complied with, failing which the donation is void and produces no effect.[35]

As noted by the trial court, the attesting witnesses failed to acknowledge the deed before the notary public, thus violating Article 806 of the Civil Code which provides:

Art. 806. Every will must be acknowledged before a notary public by the testator and the witnesses. The notary public shall not be required to retain a copy of the will, or file another with the office of the Clerk of Court. (Emphasis supplied)

The trial court did not thus commit any reversible error in declaring the Deed of Donation to be mortis causa.

WHEREFORE, the petition is hereby DENIED for lack of merit.

SO ORDERED.

URSULINA GANUELAS, et al. v. HON. ROBERT T. CAWED, et al. G. R. No. 123968, 24 April 2003, THIRD DIVISION (Carpio-Morales, J.)

Donation inter vivos differs from donation mortis causa in that in the former, the act is immediately operative even if the actual execution may be deferred until the death of the donor, while in the latter, nothing is conveyed to or acquired by the donee until the death of the donor-testator.

FACTS: Celestina Ganuelas Vda. de Valin executed a Deed of Donation of Real Property in favor of petitioner Ursulina Ganuelas. The pertinent portion of the Deed of Donation reads: ―That for and in consideration of the love and affection which the DONOR has for the DONEE, and of the faithful services the latter has rendered in the past to the former, the said DONOR does by these presents transfer and convey, by way of DONATION, unto the DONEE the property above, described, to become effective upon the death of the DONOR; but in the event that the DONEE should die before the DONOR, the present donation shall be deemed rescinded and of no further force and effect.However, more than a month before Celestina died, she executed a document revoking such donation. After her death, Ursulina claimed ownership over the donated properties and refused to give private respondents Leocadia G. Flores, et al., niece of Celestina any share in the produce of the properties despite repeated demands. Thus, prompting Flores, et al. to file a complaint before the San Fernando, La Union Regional Trial Court (RTC), challenging the validity of the Deed of Donation. They alleged that such donation is void for failure to comply with the formalities of wills and testaments, which is necessary in a disposition mortis causa.

On the other hand, Ursulina maintains that there is no need to comply with the formalities of wills and testaments because such donation was inter vivos.

The RTC ruled that the Deed of Donation is a disposition mortis causa, thus, void for failure to comply with the formalities of wills and testaments.

ISSUE: Whether or not the donation is inter vivos or mortis causa

HELD: Crucial in the resolution of the issue is the determination of whether the donor intended to transfer the ownership over the properties upon the execution of the deed. Donation inter vivos differs from donation mortis causa in that in the former, the act is immediately operative even if the actual execution may be deferred until the death of the donor, while in the latter, nothing is conveyed to or acquired by the donee until the death of the donor-testator.

If the donation is made in contemplation of the donor‘s death, meaning that the full or naked ownership of the donated properties will pass to the donee only because of the donor‘s death, then it is at that time that the donation takes effect, and it is a donation mortis causa which should be embodied in a last will and testament.

But if the donation takes effect during the donor‘s lifetime or independently of the donor‘s death, meaning that the full or naked ownership (nuda proprietas) of the donated properties passes to the donee during the donor‘s lifetime, not by reason of his death but because of the deed of donation, then the donation is inter vivos.

The distinction between a transfer inter vivos and mortis causa is important as the validity or revocation of the donation depends upon its nature. If the donation is inter vivos, it must be executed and accepted with the formalities prescribed by Articles 748 and 749 of the Civil Code, except when it is onerous in which case the rules on contracts will apply. If it is mortis causa, the donation must be in the form of a will, with all the formalities for the validity of wills, otherwise it is void and cannot transfer ownership.

The distinguishing characteristics of a donation mortis causa are the following:

1. It conveys no title or ownership to the transferee before the death of the transferor; or, what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive;

2. That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed;

3. That the transfer should be void if the transferor should survive the transferee.

In the donation subject of the present case, there is nothing therein which indicates that any right, title or interest in the donated properties was to be transferred to Ursulina prior to the death of Celestina. The phrase ―to become effective upon the death of the DONOR‖ admits of no other interpretation but that Celestina intended to transfer the ownership of the properties to Ursulina on her death, not during her lifetime.

More importantly, the provision in the deed stating that if the donee should die before the donor, the donation shall be deemed rescinded and of no further force and effect shows that the donation is a postmortem disposition.

As stated in a long line of cases, one of the decisive characteristics of a donation mortis causa is that the transfer should be considered void if the donor should survive the donee. More. The deed contains an attestation clause expressly confirming the donation as mortis causa: To classify the donation as inter vivos simply because it is founded on considerations of love and affection is erroneous. That the donation was prompted by the affection of the donor for the donee and the services rendered by the latter is of no particular significance in determining whether the deed constitutes a transfer inter vivos or not, because a legacy may have an identical motivation. In other words, love and affection may also underline transfers mortis causa.

As the subject deed then is in the nature of a mortis causa disposition, the formalities of a will under Article 728 of the Civil Code should have been complied with, failing which the donation is void and produces no effect.

DANILO ALUAD, LEONORA ALUAD, DIVINA ALUAD, PROSPERO ALUAD, and CONNIE ALUAD,

Petitioners,

- versus -

ZENAIDO ALUAD,Respondent.

G.R. No. 176943

Present:

QUISUMBING, J., Chairperson,CARPIO MORALES,TINGA,VELASCO, JR., andBRION, JJ.

Promulgated:October 17, 2008

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x D E C I S I O N CARPIO MORALES, J.:

Petitioners mother, Maria Aluad (Maria), and respondent Zenaido Aluad were raised by the childless spouses Matilde Aluad (Matilde) and Crispin Aluad (Crispin).

Crispin was the owner of six lots identified as Lot Nos. 674, 675, 676, 677,

680, and 682 of the Pilar Cadastre, Capiz. After Crispin died, his wife Matilde adjudicated the lots to herself.[1]

On November 14, 1981, Matilde executed a document entitled Deed of

Donation of Real Property Inter Vivos[2] (Deed of Donation) in favor of petitioners mother Maria[3] covering all the six lots which Matilde inherited from her husband Crispin. The Deed of Donation provided:

That, for and in consideration of the love and affection of

the DONOR [Matilde] for the DONEE [Maria], the latter being adopted and hav[ing] been brought up by the former the DONOR, by these presents, transfer and convey, BY WAY OF DONATION, unto the DONEE the property above-described, to become effective upon the death of the DONOR , but in the event that the DONEE should die before the DONOR, the present donation shall be deemed rescinded and [of] no further force and effect; Provided, however, that anytime during the lifetime of the DONOR or anyone of them who should survive, they could use[,] encumber or even dispose of any or even all of the parcels of land herein donated.[4] (Emphasis and underscoring supplied)

On September 30, 1986, Original Certificates of Title over Lot Nos. 674 and

676 were issued in Matildes name. On August 26, 1991, Matilde sold Lot No. 676 to respondent by a Deed of

Absolute Sale of Real Property.[5]

Subsequently or on January 14, 1992, Matilde executed a last will and

testament,[6] devising Lot Nos. 675, 677, 682, and 680 to Maria, and her remaining properties including Lot No. 674 to respondent.

Matilde died on January 25, 1994, while Maria died on September 24 of the

same year.[7]

On August 21, 1995, Marias heirs-herein petitioners filed before the

Regional Trial Court (RTC) of Roxas City a Complaint, [8] for declaration and recovery of ownership and possession of Lot Nos. 674 and 676, and damages against respondent, alleging:

That in 1978, plaintiff[s] possessed the two (2) parcels of land above-described until January 1991 when defendant entered and possessed the two (2) parcels of land claiming as the adopted son of Crispin Aluad who refused to give back possession until Matilde Aluad died in [1994] and then retained the possession thereof up to and until the present time, thus, depriving the plaintiffs of the enjoyment of said parcels of land x x x;

That after the death of Matilde R. Aluad, the plaintiffs

succeeded by inheritance by right of representation from their deceased mother, Maria Aluad who is the sole and only daughter of Matilde Aluad[.][9]

To the complaint respondent alleged in his Answer.[10]

That Lot 674 is owned by the defendant as this lot was

adjudicated to him in the Last Will and Testament of Matilde Aluad x x x while Lot 676 was purchased by him from Matilde Aluad. These two lots are in his possession as true owners thereof.[11] (Underscoring supplied)

Petitioners later filed a Motion for Leave to Amend Complaint Already Filed to Conform to Evidence[12] to which it annexed an Amended Complaint[13] which cited the donation of the six lots via Deed of Donation in favor of their mother Maria. Branch 15 of the RTC granted the motion and admitted the Amended Complaint.[14]

Respondent filed an Amended Answer[15] contending, inter alia, that the

Deed of Donation is forged and falsified and petitioners change of theory showed that said document was not existing at the time they filed their complaint and was concocted by them after realizing that their false claim that their mother was the only daughter of Matild[e] Aluad cannot in anyway be established by them; [16] and that if ever said document does exist, the same was already revoked by Matilde when [she] exercised all acts of dominion over said properties until she sold Lot 676 to defendant and until her death with respect to the other lots without any opposition from Maria Aluad.[17]

The trial court, by Decision[18] of September 20, 1996, held that Matilde

could not have transmitted any right over Lot Nos. 674 and 676 to respondent, she having previously alienated them to Maria via the Deed of Donation. Thus it disposed:

WHEREFORE, in view of the foregoing, judgment is

hereby rendered: 1. Declaring the plaintiffs as the rightful owners of the

subject Lots Nos. 674 and 676, Pilar Cadastre; 2. Ordering the defendant to deliver the possession of

the subject lots to the plaintiffs; 3. Ordering the defendant to pay the plaintiffs:

a. Thirty thousand pesos (P30,000.00) as attorneys fees;

b. Twenty thousand pesos (P20,000.00), representing the income from subject Lot 676, a year from 1991 up to the time said lot is delivered to the plaintiffs, together with the interest thereof at the legal rate until fully paid;

c. Ten thousand pesos (P10,000.00), representing

the income from the subject Lot No. 674, a year from 1991 up to the time said lot is delivered to

the plaintiffs, plus legal interest thereof at the legal rate until fully paid; and

d. The costs of the suit.

Defendants counterclaim is ordered dismissed for lack of

merit. SO ORDERED.[19]

On petitioners motion, the trial court directed the issuance of a writ of

execution pending appeal.[20] Possession of the subject lots appears to have in fact been taken by petitioners.

By Decision[21] of August 10, 2006, the Court of Appeals reversed the trial courts decision, it holding that the Deed of Donation was actually a donation mortis causa, notinter vivos, and as such it had to, but did not, comply with the formalities of a will. Thus, it found that the Deed of Donation was witnessed by only two witnesses and had no attestation clause which is not in accordance with Article 805 of the Civil Code, reading:

Art. 805. Every will, other than a holographic will, must

be subscribed at the end thereof by the testator himself or by the testators name written by some other person in his presence, and by his express direction, and attested and subscribed by three or more credible witnesses in the presence of the testator and of one another.

The testator or the person requested by him to write his

name and the instrumental witnesses of the will shall, also sign, as aforesaid, each and every page thereof, except the last on the left margin and all the pages shall be numbered correlatively in letters placed on the upper part of each page.

The attestation shall state the number of pages used

upon which the will is written, and the fact that that testator signed the will and every page thereof, or caused some other person to write his name, under his express direction, in the presence of the instrumental witnesses, and that the latter witnessed and signed the will and all the pages thereof in the presence of the testator, and of one another.

If the attestation clause is in a language not known to the

witnesses, it shall be interpreted to them.

While the appellate court declared respondent as the rightful owner of Lot

No. 676, it did not so declare with respect to Lot No. 674, as Matildes last will and testament had not yet been probated. Thus the Court of Appeals disposed:

WHEREFORE, finding the instant petition worthy of

merit, the same is hereby GRANTED and the Decision of the Regional Trial Court of Roxas City, Branch 15, dated 20 September 1996, in Civil Case No. V-6686 for declaration of ownership, recovery of ownership and possession, and damages is REVERSED and SET ASIDE.

A new one is entered in its stead declaring defendant-

appellant as the lawful owner of Lot [No.] 676 of the Pilar Cadastre. Accordingly, plaintiffs-appellees are directed to return the possession of the said lot to the defendant-appellant.

Moreover, plaintiffs-appellees are ordered to pay

P40,000.00 to defendant-appellant as attorneys fees and litigation expenses.

Costs against plaintiffs-appellees. SO ORDERED.[22] (Emphasis in the

original; underscoring supplied)

Their Motion for Reconsideration[23] having been denied,[24] petitioners filed

the present Petition for Review,[25] contending that the Court of Appeals erred I X X X WHEN IT REVERSED THE DECISION OF THE COURT BELOW (RTC, Branch 15, Roxas City) HOLDING THAT THE DEED OF DONATION INTER VIVOS IN FAVOR OF PETITIONERS MOTHER IS IN FACT A DONATION MORTIS CAUSA. II X X X WHEN IT RULED THAT RESPONDENT IS THE RIGHTFUL OWNER OF LOT NO. 676 AS LOT BUYER ON THE BASIS OF A DEED OF SALE EXECUTED BY THE DONOR WHO HAD NO MORE RIGHT TO SELL THE SAME.

III X X X WHEN IT FAILED TO DECLARE PETITIONERS THE RIGHTFUL OWNER OF LOT NO. 674 AFTER HAVING RULED WHEN IT HELD THAT RESPONDENT CANNOT BE DECLARED OWNER THEREOF. IV X X X WHEN IT HELD THAT THE ISSUANCE OF A WRIT OF EXECUTION PENDING APPEAL IS IN VIOLATION OF PARAGRAPH (a) SECTION 2, RULE 39, OF THE RULES OF COURT (AND ORDERING PETITIONERS TO RETURN POSSESSION OF LOT 676 TO RESPONDENT) AND ORDERING PETITIONERS TO PAY ATTORNEYS FEES AND COST[S] OF SUIT.[26]

As did the appellate court, the Court finds the donation to petitioners

mother one of mortis causa, it having the following characteristics: (1) It conveys no title or ownership to the

transferee before the death of the transferor ; or what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive;

(2) That before the death of the transferor, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed; and

(3) That the transfer should be void if the transferor should

survive the transferee.[27] (Emphasis and underscoring supplied)

The phrase in the earlier-quoted Deed of Donation to become effective

upon the death of the DONOR admits of no other interpretation than to mean that Matilde did not intend to transfer the ownership of the six lots to petitioners mother during her (Matildes) lifetime.[28]

The statement in the Deed of Donation reading anytime during the lifetime

of the DONOR or anyone of them who should survive, they could use, encumber or even dispose of any or even all the parcels of land herein donated [29] means that Matilde retained ownership of the lots and reserved in her the right to dispose

them. For the right to dispose of a thing without other limitations than those established by law is an attribute of ownership.[30] The phrase in the Deed of Donation or anyone of them who should survive is of course out of sync. For the Deed of Donation clearly stated that it would take effect upon the death of the donor, hence, said phrase could only have referred to the donor Matilde. Petitioners themselves concede that such phrase does not refer to the donee, thus:

x x x [I]t is well to point out that the last provision (sentence) in the disputed paragraph should only refer to Matilde Aluad, the donor, because she was the only surviving spouse at the time the donation was executed on 14 November 1981, as her husband Crispin Aluad [] had long been dead as early as 1975.[31]

The trial court, in holding that the donation was inter vivos, reasoned:

x x x The donation in question is subject to a

resolutory term or period when the donor provides in the aforequoted provisions, but in the event that the DONEE should die before the DONOR, the present donation shall be deemed rescinded and [of] no further force and effect. When the donor provides that should the DONEE xxx die before the DONOR, the present donation shall be deemed rescinded and [of] no further force and effect the logical construction thereof is that after the execution of the subject donation, the same became effective immediately and shall be deemed rescinded and [of] no further force and effect upon the arrival of a resolutory term or period, i.e., the death of the donee which shall occur before that of the donor. Understandably, the arrival of this resolutory term or period cannot rescind and render of no further force and effect a donation which has never become effective, because, certainly what donation is there to be rescinded and rendered of no further force and effect upon the arrival of said resolutory term or period if there was no donation which was already effective at the time when the donee died?[32] (Underscoring supplied)

A similar ratio in a case had been brushed aside by this Court, however,

thus:

x x x [P]etitioners contend that the stipulation on rescission in case petitioners [donee] die ahead of [donor]

Cabatingan is a resolutory condition that confirms the nature of the donation as inter vivos.

Petitioners arguments are bereft of merit.[33]

x x x x x x x The herein subject deeds expressly provide that the

donation shall be rescinded in case [donees] the petitioners predecease [the donor] Conchita Cabatingan. As stated in Reyes v. Mosqueda, one of the decisive characteristics of a donation mortis causa is that the transfer should be considered void if the donor should survive the donee. This is exactly what Cabatingan provided for in her donations. If she really intended that the donation should take effect during her lifetime and that the ownership of the properties donated to the donee or independently of, and not by reason of her death, she would not have expressed such proviso in the subject deeds.[34] (Underscoring supplied)

As the Court of Appeals observed, x x x [t]hat the donation is mortis causa is

fortified by Matildes acts of possession as she continued to pay the taxes for the said properties which remained under her name; appropriated the produce; and applied for free patents for which OCTs were issued under her name.[35]

The donation being then mortis causa, the formalities of a will should have

been observed[36] but they were not, as it was witnessed by only two, not three or more witnesses following Article 805 of the Civil Code.[37]

Further, the witnesses did not even sign the attestation clause[38] the

execution of which clause is a requirement separate from the subscription of the will and the affixing of signatures on the left-hand margins of the pages of the will. So the Court has emphasized:

x x x Article 805 particularly segregates the requirement

that the instrumental witnesses sign each page of the will from the requisite that the will be attested and subscribed by [the instrumental witnesses]. The respective intents behind these two classes of signature[s] are distinct from each other. The signatures on the left-hand corner of every page signify, among others, that the witnesses are aware that the page they are signing forms part of the will. On the other hand, the signatures to the attestation clause establish that the witnesses are referring to the statements

contained in the attestation clause itself. Indeed, the attestation clause is separate and apart from the disposition of the will. An unsigned attestation clause results in an unattested will. Even if the instrumental witnesses signed the left-hand margin of the page containing the unsigned attestation clause, such signatures cannot demonstrate these witnesses undertakings in the clause, since the signatures that do appear on the page were directed towards a wholly different avowal.

x x x It is the witnesses, and not the testator, who are required under Article 805 to state the number of pages used upon which the will is written; the fact that the testator had signed the will and every page thereof; and that they witnessed and signed the will and all the pages thereof in the presence of the testator and of one another. The only proof in the will that the witnesses have stated these elemental facts would be their signatures on the attestation clause.[39] (Emphasis and underscoring supplied)

Furthermore, the witnesses did not acknowledge the will before the notary

public,[40] which is not in accordance with the requirement of Article 806 of the Civil Code that every will must be acknowledged before a notary public by the testator and the witnesses.

More. The requirement that all the pages of the will must be numbered correlatively in letters placed on the upper part of each page was not also followed.[41]

The Deed of Donation which is, as already discussed, one of mortis

causa, not having followed the formalities of a will, it is void and transmitted no right to petitioners mother. But even assuming arguendo that the formalities were observed, since it was not probated, no right to Lot Nos. 674 and 676 was transmitted to Maria.[42] Matilde thus validly disposed of Lot No. 674 to respondent by her last will and testament, subject of course to the qualification that her (Matildes) will must be probated. With respect to Lot No. 676, the same had, as mentioned earlier, been sold by Matilde to respondent on August 26, 1991.

Petitioners nevertheless argue that assuming that the donation of Lot No.

674 in favor of their mother is indeed mortis causa, hence, Matilde could devise it to respondent, the lot should nevertheless have been awarded to them because they had acquired it by acquisitive prescription, they having been in continuous, uninterrupted, adverse, open, and public possession of it in good faith and in the concept of an owner since 1978.[43]

Petitioners failed to raise the issue of acquisitive prescription before the lower courts, however, they having laid their claim on the basis of inheritance from their mother.As a general rule, points of law, theories, and issues not brought to the attention of the trial court cannot be raised for the first time on appeal. [44] For a contrary rule would be unfair to the adverse party who would have no opportunity to present further evidence material to the new theory, which it could have done had it been aware of it at the time of the hearing before the trial court.[45]

WHEREFORE, the petition is DENIED. SO ORDERED.

FELOMINA[1] ABELLANA, G.R. No. 160488Petitioner,Present:Davide, Jr., C.J. (Chairman),

- versus - Quisumbing,Ynares-Santiago,

Carpio, andAzcuna, JJ.

SPOUSES ROMEO PONCE andLUCILA PONCE and the REGISTER Promulgated:OF DEEDS of BUTUAN CITY,Respondents. September 3, 2004 x ---------------------------------------------------------------------------------------- x DECISION 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 andSET 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 followingMODIFICATIONS:

(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.

D E C I S I O N

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 -- 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 Decision [1] of the Court of Appeals[2] 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 disposed[3] 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 attorneys fees; and

3. Costs against the defendant.

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

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

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

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

Ruling of the Appellate Court

In reversing the trial courts decision,[7] Respondent Court of Appeals anchored its ruling upon the absence of any showing that petitioner accepted his grandmothers donation of the subject land. Citing jurisprudence that the donees 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 petitioners claim of ownership over the disputed land. The appellate court also struck down petitioners 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 Courts 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 petitioners 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] [underscoring 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 x x x 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 benotified 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:

x x x 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 petitioners name.

A close perusal of the city governments resolution[23] granting petitioners 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, petitioners 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 x x x constructed on the lot is a make-shift structure used for residential purposes by the proposed transferee Tito Lagazo and his family; x x x 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. x x x

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

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 petitioners request for transfer, it is the former to which the Court is inclined to give more credence. The investigators report must have been based on the misrepresentations of petitioner who arrogated unto himself the prerogatives of both Espaol and private respondent. Further, it is on record that petitioner had required private respondent to vacate the subject premises before he instituted this complaint. This shows he was not in actual possession of the property, contrary to the report of the investigator.

Cabanlits Claim of Ownership

Petitioner also assails Respondent Courts conclusion that it is unnecessary to pass upon private respondents 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 respondents claim of ownership, the examination of the genuineness of the documents (deeds of assignment over the lot between Catalina Reyes and Eduardo Espaol and between Espaol and private respondent) upon which he asserts his right is necessary, especially in light of petitioners 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 theirstatus quo ante. The trial court should have dismissed his complaint for his failure to prove a right superior to that of private respondent, but without prejudice to any action that Catalina Reyes or Eduardo Espaol or both may have against said private respondent. Stating this point otherwise, we are not ruling in this case on the rights and obligations between, on the one hand, Catalina Reyes, her assigns and/or representatives; and, on the other, Private Respondent Cabanlit.

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 attorneys fees.[27]

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

SO ORDERED.

ELVIRA T. ARANGOTE,Petitioner,

- versus -

SPS. MARTIN MAGLUNOBand LOURDES S. MAGLUNOB, and ROMEO SALIDO,Respondents.

G.R. No. 178906

Present:

QUISUMBING, J.,*

AUSTRIA-MARTINEZ,Acting Chairperson,CHICO-NAZARIO,NACHURA, andPERALTA, JJ.

Promulgated:

February 18, 2009x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x D E C I S I O N 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. SO ORDERED.