Table of Contents

Siguan vs. Lim..............................................................................................................................................2

Noceda vs. Court of Appeals........................................................................................................................6
Heirs of Cesario Velasquez vs. Court of Appeals........................................................................................10
Gonzales vs. Court of Appeals...................................................................................................................13
Imperial vs. Court of Appeals.....................................................................................................................16
Republic vs. Silim.......................................................................................................................................20
Gestopa vs. Court of Appeals....................................................................................................................23
Carinan vs. Cueto.......................................................................................................................................27
Calanasan vs. Dolorito...............................................................................................................................30
Victoria vs. Pidlaoan..................................................................................................................................32
Heirs of Rafael Gozo vs. Philippine Union Mission Corporation of the Seventh Day Adventist Church.....35
 Siguan vs. Lim
318 SCRA 725, G.R. No. 134685 November 19, 1999

Doctrine: For the presumption of fraud under Arts. 759 and 1387 of the Civil Code to apply, it must be
established that the donor did not leave adequate properties which creditors might have recourse for
the collection of their credits existing before the execution of the donation.

Facts:
Respondent issued two Metrobank checks to petitioner. However, the checks were dishonored for the
reason account closed. After demands to make good the checks proved futile, a criminal case for
violation of Batas Pambansa Blg. 22 was filed by the petitioner. The lower court convicted the
respondent. Later, respondent was also charged with estafa by a certain Victoria Suarez. Respondent
was acquitted but held civilly liable.

Thereafter, a Deed of Donation conveying the parcels of land and purportedly executed by respondent
in favor of her children was registered. Petitioner filed an accion pauliana against respondent and her
children to rescind the questioned Deed of Donation. She alleges that respondent and her children
conspired to fraudulently transfer all her real property to her children in bad faith and in fraud of
creditors, including her.

The trial court ordered the rescission of the deed of donation. But upon appeal, the CA reversed the
decision contending that two of the requisites for filing an accion pauliana were absent, namely, (1)
there must be a credit existing prior to the celebration of the contract; and (2) there must be a fraud, or
at least the intent to commit fraud, to the prejudice of the creditor seeking the rescission. The CA argues
the deed of donation appears to have been executed prior to any credit.

Issue: Whether or not the Deed of Donation was made in fraud of petitioner and, therefore, rescissible

Ruling: Negative.

Art. 1381 of the Civil Code enumerates the contracts which are rescissible, and among them are "those
contracts undertaken in fraud of creditors when the latter cannot in any other manner collect the claims
due them."

The action to rescind contracts in fraud of creditors is known as accion pauliana. For this action to
prosper, the following requisites must be present: (1) the plaintiff asking for rescission has a credit prior
to the alienation, although demandable later; (2) the debtor has made a subsequent contract conveying
a patrimonial benefit to a third person; (3) the creditor has no other legal remedy to satisfy his claim;  (4)
the act being impugned is fraudulent; (5) the third person who received the property conveyed, if it is by
onerous title, has been an accomplice in the fraud. 

The general rule is that rescission requires the existence of creditors at the time of the alleged
fraudulent alienation, and this must be proved as one of the bases of the judicial pronouncement setting
aside the contract. Without any prior existing debt, there can neither be injury nor fraud. While it is
necessary that the credit of the plaintiff in the accion pauliana  must exist prior to the fraudulent
alienation, the date of the judgment enforcing it is immaterial. Even if the judgment be subsequent to
the alienation, it is merely declaratory, with retroactive effect to the date when the credit was
constituted.

In the instant case, the alleged debt of LIM in favor of petitioner was incurred in August 1990, while the
deed of donation was purportedly executed on 10 August 1989.

We are not convinced with the allegation of the petitioner that the questioned deed was antedated to
make it appear that it was made prior to petitioner's credit. Notably, that deed is a public document, it
having been acknowledged before a notary public. As such, it is evidence of the fact which gave rise to
its execution and of its date, pursuant to Section 23, Rule 132 of the Rules of Court.

Petitioner's contention that the public documents referred to in said Section 23 are only those entries in
public records made in the performance of a duty by a public officer does not hold water. Section 23
reads:

Sec. 23. Public documents as evidence. — Documents consisting of entries in public records

made in the performance of a duty by a public officer are  prima facie  evidence of the facts
therein stated. All other public documents are evidence, even against a third person, of the fact
which gave rise to their execution and of the date of the latter. (Emphasis supplied).

The phrase "all other public documents" in the second sentence of Section 23 means those public
documents other than the entries in public records made in the performance of a duty by a public
officer. And these include notarial documents, like the subject deed of donation. Section 19, Rule 132 of
the Rules of Court provides:

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

Public documents are:

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

It bears repeating that notarial documents, except last wills and testaments, are public documents and
are evidence of the facts that gave rise to their execution and of their date.

In the present case, the fact that the questioned Deed was registered only on 2 July 1991 is not enough
to overcome the presumption as to the truthfulness of the statement of the date in the questioned
deed, which is 10 August 1989. Petitioner's claim against LIM was constituted only in August 1990, or a
year after the questioned alienation. Thus, the first two requisites for the rescission of contracts are
absent.
Even assuming arguendo  that petitioner became a creditor of LIM prior to the celebration of the
contract of donation, still her action for rescission would not fare well because the third requisite was
not met. Under Article 1381 of the Civil Code, contracts entered into in fraud of creditors may be
rescinded only when the creditors cannot in any manner collect the claims due them. Also, Article 1383
of the same Code provides that the action for rescission is but a subsidiary remedy which cannot be
instituted except when the party suffering damage has no other legal means to obtain reparation for the
same. The term "subsidiary remedy" has been defined as "the exhaustion of all remedies by the
prejudiced creditor to collect claims due him before rescission is resorted to." It is, therefore, "essential
that the party asking for rescission prove that he has exhausted all other legal means to obtain
satisfaction of his claim. Petitioner neither alleged nor proved that she did so. On this score, her action
for the rescission of the questioned deed is not maintainable even if the fraud charged actually did
exist."

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

Art. 1387, first paragraph, of the Civil Code provides: "All contracts by virtue of which the debtor
alienates property by gratuitous title are presumed to have been entered into in fraud of creditors when
the donor did not reserve sufficient property to pay all debts contracted before the donation. Likewise,
Article 759 of the same Code, second paragraph, states that the donation is always presumed to be in
fraud of creditors when at the time thereof the donor did not reserve sufficient property to pay his
debts prior to the donation.

For this presumption of fraud to apply, it must be established that the donor did not leave adequate
properties which creditors might have recourse for the collection of their credits existing before the
execution of the donation.

As earlier discussed, petitioner's alleged credit existed only a year after the deed of donation was
executed. She cannot, therefore, be said to have been prejudiced or defrauded by such alienation.
Besides, the evidence disclose that as of 10 August 1989, when the deed of donation was executed, LIM
had the following properties:
(1) A parcel of land containing an area of 220 square meters, together with the house constructed
thereon, situated in Sto. Niño Village, Mandaue City, Cebu, registered in the name of Rosa Lim
and covered by TCT No. 19706;
(2) A parcel of land located in Benros Subdivision, Lawa-an, Talisay, Cebu; 
(3) A parcel of land containing an area of 2.152 hectares, with coconut trees thereon, situated at
Hindag-an, St. Bernard, Southern Leyte, and covered by Tax Declaration No. 13572. 
(4) A parcel of land containing an area of 3.6 hectares, with coconut trees thereon, situated at
Hindag-an, St. Bernard, Southern Leyte, and covered by Tax Declaration No. 13571.

Nevertheless, a creditor need not depend solely upon the presumption laid down in Articles 759 and
1387 of the Civil Code. Under the third paragraph of Article 1387, the design to defraud may be proved
in any other manner recognized by the law of evidence. Thus in the consideration of whether certain
transfers are fraudulent, the Court has laid down specific rules by which the character of the transaction
may be determined. The following have been denominated by the Court as badges of fraud:
 (1) The fact that the consideration of the conveyance is fictitious or is inadequate;
(2) A transfer made by a debtor after suit has begun and while it is pending against him;
(3) A sale upon credit by an insolvent debtor;
(4) Evidence of large indebtedness or complete insolvency;
(5) The transfer of all or nearly all of his property by a debtor, especially when he is insolvent or
greatly embarrassed financially;
(6) The fact that the transfer is made between father and son, when there are present other of the
above circumstances; and
(7) The failure of the vendee to take exclusive possession of all the property. 

The above enumeration, however, is not an exclusive list. The circumstances evidencing fraud are as
varied as the men who perpetrate the fraud in each case. This Court has therefore declined to define it,
reserving the liberty to deal with it under whatever form it may present itself. 

Petitioner failed to discharge the burden of proving any of the circumstances enumerated above or any
other circumstance from which fraud can be inferred. Accordingly, since the four requirements for the
rescission of a gratuitous contract are not present in this case, petitioner's action must fail.
 Noceda vs. Court of Appeals
313 SCRA 504, G.R. No. 119730 September 2, 1999

Doctrine: Petitioner’s act of occupying the portion pertaining to private respondent Directo without
the latter’s knowledge and consent is an act of usurpation which is an offense against the property of
the donor and considered as an act of ingratitude of a donee against the donor. The law does not
require conviction of the donee; it is enough that the offense be proved in the action for revocation.

The action to revoke by reason of ingratitude prescribes within one (1) year to be counted from the
time (a) the donor had knowledge of the fact; (b) provided that it was possible for him to bring the
action. It is incumbent upon petitioner to show proof of the concurrence of these two conditions in
order that the one (1) year period for bringing the action be considered to have already prescribed.

Facts:
Plaintiff Aurora Directo, defendant Rodolfo Noceda, and Maria Arbizo, the daughter, grandson, and
widow, respectively, of the late Celestino Arbizo extrajudicially settled a parcel of land located at Bitaog,
San Isidro, Cabangan, Zambales, which was said to have an area of 66,530 square meters.  Plaintiff
Directo’s share was 11,426 square meters, defendant Noceda got 13,294 square meters, and the
remaining 41,810 square meters went to Maria Arbizo.  Plaintiff Directo donated 625 square meters of
her share to defendant Noceda, who is her nephew being the son of her deceased sister, Carolina. 
However, another extrajudicial settlement-partition of Lot 1121 was executed by plaintiff Directo,
defendant Noceda, and Maria Arbizo.  Three fifths of the said land went to Maria Arbizo while plaintiff
Directo and defendant Noceda got only one-fifth each.  In said extrajudicial settlement-partition as well
as in the Tax Declaration 16-0032 over Lot 1121 in the name of the late Celestino Arbizo, the said parcel
of land was said to have an area of only 29,845 square meters.

Sometime in 1981, defendant Noceda constructed his house on the land donated to him by plaintiff
Directo.  Plaintiff Directo fenced the portion allotted to her in the extrajudicial settlement, excluding the
donated portion, and constructed thereon three huts.  But in 1985, defendant Noceda removed the
fence earlier constructed by plaintiff Directo, occupied the three huts (3) and fenced the entire land of
plaintiff Directo without her consent.  Plaintiff Directo demanded from defendant Noceda to vacate her
land, but the latter refused.

Hence, plaintiff Directo filed the present suit, a complaint for the recovery of possession and ownership
and rescission/annulment of donation, against defendant Noceda before the lower court.

Trial court ruled in favor of plaintiff Directo ordering the revocation of the donation.

Issue: Whether or not Noceda’s acts of usurpation constitute an act of ingratitude sufficient to grant the
revocation of the donation

Ruling: Affirmative.
Petitioner argues that he did not usurp the property of respondent Directo since, to date, the metes and
bounds of the parcel of land left by their predecessor in interest, Celestino Arbizo, are still undetermined
since no final determination as to the exact areas properly pertaining to the parties herein; hence they
are still considered as co-owners thereof.

We do not agree.

In this case the source of co-ownership among the heirs was intestate succession. Where there are two
or more heirs, the whole estate of the decedent is, before its partition, owned in common by such heirs
subject to the payment of debts of the deceased. Partition, in general, is the separation, division and
assignment of a thing held in common among those to whom it may belong. The purpose of partition is
to put an end to co-ownership. It seeks a severance of the individual interest of each co-owner, vesting
in each a sole estate in specific property and giving to each one a right to enjoy his estate without
supervision or interference from the other. And one way of effecting a partition of the decedent's estate
is by the heirs themselves extrajudicially. The heirs of the late Celestino Arbizo namely Maria Arbizo,
Aurora A. Directo (private respondent) and Rodolfo Noceda (petitioner) entered into an extrajudicial
settlement of the estate on August 17, 1981 and agreed to adjudicate among themselves the property
left by their predecessor-in-interest in the following manner:

To Rodolfo Noceda goes the northern one-fifth (1/5) portion containing an area of 5,989 sq.
meters;

To Maria Arbizo goes the middle three-fifths (3/5) portion; and To Aurora Arbizo goes the
southern one-fifth (1/5) portion. 

In the survey plan submitted by Engineer Quejada, the portions indicated by red lines and numbered
alphabetically were based on the percentage proportion in the extrajudicial settlement and the actual
occupancy of each heir which resulted to these divisions as follows:

Lot A; the area is 2,957 sq.m. — goes to Rodolfo A. Noceda (1/5)

Lot B; 38,872 sq.m. Maria Arbizo (3/5)
Lot C; 12,957 sq.m. Aurora Arbizo (1/5)

Thus, the areas allotted to each heir are now specifically delineated in the survey plan. There is no co-
ownership where portion owned is concretely determined and identifiable, though not technically
described, or that said portions are still embraced in one and the same certificate of title does not make
said portions less determinable or identifiable, or distinguishable, one from the other, nor that dominion
over each portion less exclusive, in their respective owners. A partition legally made confers upon each
heir the exclusive ownership of the property adjudicated to him.

We also find unmeritorious petitioner's argument that since there was no effective and real partition of
the subject lot there exists no basis for the charge of usurpation and hence there is also no basis for
finding ingratitude against him. It was established that petitioner Noceda occupied not only the portion
donated to him by private respondent Aurora Arbizo-Directo but he also fenced the whole area of Lot C
which belongs to private respondent Directo, thus petitioner's act of occupying the portion pertaining to
private respondent Directo without the latter's knowledge and consent is an act of usurpation which is
an offense against the property of the donor and considered as an act of ingratitude of a donee against
the donor. The law does not require conviction of the donee; it is enough that the offense be proved in
the action for revocation.

Finally, petitioner contends that granting revocation is proper, the right to enforce the same had already
prescribed since as admitted by private respondent, petitioner usurped her property in the first week of
September 1985 while the complaint for revocation was filed on September 16, 1986, thus more than
one (1) year had passed from the alleged usurpation by petitioner of private respondent's share in Lot
1121. We are not persuaded. The respondent Court rejected such argument in this wise:

Art. 769 of the New Civil Code states that: "The action granted to the donor by reason of
ingratitude cannot be renounced in advance. This action prescribes within one year to be
counted from the time the donor had knowledge of the fact and it was possible for him to bring
the action." As expressly stated, the donor must file the action to revoke his donation within one
year from the time he had knowledge of the ingratitude of the donee. Also, it must be shown
that it was possible for the donor to institute the said action within the same period. The
concurrence of these two requisites must be shown by defendant Noceda in order to bar the
present action. Defendant Noceda failed to do so. He reckoned the one year prescriptive period
from the occurrence of the usurpation of the property of plaintiff Directo in the first week of
September, 1985, and not from the time the latter had the knowledge of the usurpation.
Moreover, defendant Noceda failed to prove that at the time plaintiff Directo acquired
knowledge of his usurpation, it was possible for plaintiff Directo to institute an action for
revocation of her donation.

The action to revoke by reason of ingratitude prescribes within one (1) year to be counted from the time
(a) the donor had knowledge of the fact; (b) provided that it was possible for him to bring the action. It is
incumbent upon petitioner to show proof of the concurrence of these two conditions in order that the
one (1) year period for bringing the action be considered to have already prescribed. No competent
proof was adduced by petitioner to prove his allegation. In Civil Cases, the party having the burden of
proof must establish his case by preponderance of evidence. He who alleges a fact has the burden of
proving it and a mere allegation is not evidence.

Factual findings of the Court of Appeals, supported by substantial evidence on record are final and
conclusive on the parties and carry even more weight when the Court of Appeals affirms the factual
findings of the trial court; for it is not the function of this Court to re-examine all over again the oral and
documentary evidence submitted by the parties unless the findings of fact of the Court of Appeals are
not supported by the evidence on record or the judgment is based on the misapprehension of facts.  The
jurisdiction of this court is thus limited to reviewing errors of law unless there is a showing that the
findings complained of are totally devoid of support in the record or that they are so glaringly erroneous
as to constitute serious abuse of discretion. We find no such showing in this case.
We find that both the trial court and the respondent Court had carefully considered the questions of
fact raised below and the respondent Court's conclusions are based on the evidence on record. No
cogent reason exists for disturbing such findings.
 Heirs of Cesario Velasquez vs. Court of Appeals
325 SCRA 552, G.R. No. 126996 February 15, 2000

Doctrine: A donation as a mode of acquiring ownership results in an effective transfer of title over the
property from the donor to the donee and the donation is perfected from the moment the donor
knows of the acceptance by the donee. And once a donation is accepted, the donee becomes the
absolute owner of the property donated.

Facts:
Spouses Leoncia de Guzman and Cornelio Aquino died intestate sometime in 1945 and 1947,
respectively and were childless. Leoncia de Guzman was survived by her sisters Anatalia de Guzman
(mother of the plaintiffs) and Tranquilina deGuzman (grandmother of the defendants). During the
existence of their marriage, spouses Aquino were able to acquire real properties.

The plaintiffs alleged that Leoncia de Guzman, before her death, had a talk with the plaintiffs’ mother,
Anatalia de Guzman, with plaintiff Santiago Meneses and Tranquilina de Guzman and his son Cesario
Velasquez in attendance; that in the conference Leoncia told Anatalia de Guzman, Tranquilina de
Guzman and Cesario Velaquez that the documents of donation and partition which she and her husband
earlier executed were not signed by them as it was not their intention to give away all the properties to
Cesario Velasquez because Anatalia de Guzman who is one of her sisters had several children to support;
Cesario Velasquez together with his mother allegedly promised to divide the properties equally and to
give the plaintiffs one-half (1/2) thereof; that they are entitled to ½ of each of all the properties in
question being
the children of Anatalia de Guzman, full blood sister of Leoncia de Guzman.

Plaintiffs alsio claim that after the death of Leoncia, defendants forcibly took possession of all the
properties and despite plaintiffs’ repeated demands for partition, defendants refused. Plaintiffs pray for
the nullity of any documents covering the properties in question since they do not bear the genuine
signatures of the Aquino spouses, to order the partition of the properties between plaintiffs and
defendants in equal shares and to order the defendants to render an accounting of the produce of the
land in question from the time defendants forcibly took possession until partition shall have been
effected.

Issue: Whether or not the action for partition can be maintained

Ruling: Negative.

In actions for partition, the court cannot properly issue an order to divide the property unless it first
makes a determination as to the existence of co-ownership. The court must initially settle the issue of
ownership, the first stage in an action for partition. Needless to state, an action for partition will not lie if
the claimant has no rightful interest over the subject property. In fact, Section 1 of Rule 69 requires the
party filing the action to state in his complaint the "nature and the extent of his title" to the real estate.
Until and unless the issue of ownership is definitely resolved, it would be premature to effect a partition
of the properties.

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

On the other hand, petitioners were able to adduce the uncontroverted and ancient documentary
evidence showing that during the lifetime of the Aquino spouses they had already disposed of four of
the six parcels of land subject of the complaint starting in the year 1919, and the latest was in 1939 as
follows: (a) Escritura de donation propter nuptias dated February 15, 1919 in favor of the future spouses
Cesario Velasquez and Camila de Guzman (petitioners' parents) conveying to them a portion of the
second parcel in the complaint and the entirety of the third and sixth parcels; (b) Deed of donation  inter
vivos dated April 10, 1939 conveying the first parcel in favor of petitioners Anastacia Velasquez and Jose
Velasquez; (c) Escritura de Compraventa dated August 25, 1924 conveying another portion of the second
parcel in favor of Cesario Velasquez and Camila de Guzman with a P500 consideration; (d) Deed of
Conveyance dated July 14, 1939 in favor of Cesario Velasquez and Camila de Guzman conveying to them
the remaining portion of the second parcel for a consideration of P600 and confirming in the same Deed
the Escritura de donation propter nuptias and Escritura de compraventa abovementioned. It was
reversible error for the court to overlook the probative value of these notarized documents.
A donation as a mode of acquiring ownership results in an effective transfer of title over the property
from the donor to the donee and the donation is perfected from the moment the donor knows of the
acceptance by the donee. And once a donation is accepted, the donee becomes the absolute owner of
the property donated. The donation of the first parcel made by the Aquino spouses to petitioners Jose
and Anastacia Velasquez who were then nineteen (19) and ten (10) years old respectively was accepted
through their father Cesario Velasquez, and the acceptance was incorporated in the body of the same
deed of donation and made part of it, and was signed by the donor and the acceptor. Legally speaking
there was delivery and acceptance of the deed, and the donation existed perfectly and irrevocably. The
donation inter vivos may be revoked only for the reasons provided in Articles 760, 764 and 765 of the
Civil Code. The donation propter nuptias in favor of Cesario Velasquez and Camila de Guzman over the
third and sixth parcels including a portion of the second parcel became the properties of the spouses
Velasquez since 1919. The deed of donation propter nuptias can be revoked by the non-performance of
the marriage and the other causes mentioned in article 86 of the Family Code. The alleged reason for
the repudiation of the deed, i.e., that the Aquino spouses did not intend to give away all their properties
since Anatalia (Leoncia's sister) had several children to support is not one of the grounds for revocation
of donation either inter vivos or  propter nuptias, although the donation might be inofficious.

The Escritura compraventa over another portion of the second parcel and the Deed of conveyance dated
July 14, 1939 in favor of Cesario and Camila Velasquez over the remaining portion of the second parcel is
also valid. In fact in the deed of sale dated July 14, 1939, the Aquino spouses ratified and confirmed the
rights and interests of Cesario Velasquez and Camila de Guzman including the previous deeds of
conveyance executed by the Aquino spouses over the second parcel in the complaint and such deed of
sale became the basis for the issuance of TCT No. 15129 in the names of Cesario Velasquez and Camila
de Guzman on July 25, 1939. The best proof of the ownership of the land is the certificate of title and it
requires more than a bare allegation to defeat the face value of TCT No. 15129 which enjoys a legal
presumption of regularity of issuance. Notably, during the lifetime of Cesario Velasquez, he entered into
contracts of mortgage and lease over the property as annotated at the back of the certificate of title
which clearly established that he exercised full ownership and control over the property. It is quite
surprising that it was only after more than fifty years that private respondents asserted co-ownership
claim over the subject property.

The Aquino spouses had disposed the four parcels of land during their lifetime and the documents were
duly notarized so that these documents enjoy the presumption of validity. Such presumption has not
been overcome by private respondent Santiago Meneses with clear and convincing evidence. In civil
cases, the party having the burden of proof must establish his case by a preponderance of evidence.
Petitioners were able to establish that these four parcels of land were validly conveyed to them by the
Aquino spouses hence they no longer formed part of the conjugal properties of the spouses at the time
of their deaths. As regards the fourth and fifth parcels, petitioners alleged that these were also
conveyed to third persons and they do not claim any right thereto.

In view of the foregoing, we conclude that this action of partition cannot be maintained. The properties
sought to be partitioned by private respondents have already been delivered to petitioners and
therefore no longer part of the hereditary estate which could be partitioned. After finding that no co-
ownership exist between private respondents and petitioners, we find no reason to discuss the other
arguments raised by the petitioners in support of their petition.
 Gonzales vs. Court of Appeals
358 SCRA 598, G.R. No. 110335 June 18, 2001

Doctrine: As between the parties to a donation of an immovable property, all that is required is for
said donation to be contained in a public document. Registration is not necessary for it to be
considered valid and effective. However, in order to bind third persons, the donation must be
registered in the Registry of Property (now Registry of Land Titles and Deeds). Although the non-
registration of a deed of donation shall not affect its validity, the necessity of registration comes into
play when the rights of third persons are affected.

It is actually the act of registration that operates to convey registered land or affect title thereto.
Further, it is an entrenched doctrine in our jurisdiction that registration in a public registry creates
constructive notice to the whole world.

Facts:
The now deceased spouses Ignacio and Marina Gonzales were the registered owners of two parcels of
agricultural land situated at Barrio Fortaleza, Cabanatuan City, covered by TCT No. 2742 and
denominated as Lot 551-C and Lot 552-A. Herein petitioners are the successors-in-interest or the
children and grandchildren of said Gonzales spouses. On the other hand, private respondents are the
farmers and tenants of said spouses who have been cultivating the parcels of land even before the
World War II either personally or through their predecessors-in-interest.

Marina Gonzales died intestate and appointed as administratrix of her estate was petitioner Lilia
Gonzales. Prior to the partition of the said estate, Ignacio Gonzales executed a Deed of Donation
conveying his share of the property, specifically Lot 551-C, in favor of his 14 grandchildren. The said
donation was not registered. Thus, when PD No. 27 took effect, the landholdings of the spouses
Gonzales were placed under Operation Land Transfer by virtue of said decree, and private respondents
were accordingly issued the corresponding Certificates of Land Transfer and Emancipation Patent.

The administratrix Lilia Gonzales later filed an application for retention with the then Ministry of
Agrarian Reform, requesting that their property be excluded from the coverage of Operation Land
Transfer. After initial investigation, Hearing Officer Melchor Pagsolingan recommended the denial of said
application for retention and this action was affirmed by the Assistant Secretary of Agrarian Reform
Benjamin Labayen. Apparently, however, a reinvestigation was conducted, resulting in the present DAR
resolution, recommending that the land subject of the deed of donation, or Lot 551-C, be exempt from
Operation Land Transfer. DAR Secretary Benjamin Leong issued an order declaring that the subject
landholdings covered by the deed of donation are exempt from Operation Land Transfer, and cancelling
the Certificates of Land Transfer issued in favor of private respondents.

Aggrieved by this ruling, private respondents filed a petition for certiorari with the Court of Appeals
which rendered a decision reversing the action of the DAR and upholding the certificates of land transfer
and emancipation patent. Petitioners moved for a reconsideration but the same was denied by the
Court of Appeals. Thus, the instant petition was filed before the Supreme Court.
Issue: Whether or not the property subject of the deed of donation which was not registered when PD
No. 27 took effect, should be excluded from the Operation Land Transfer

Ruling: Negative.

Petitioners insist that the deed of donation executed by Ignacio Gonzales validly transferred the
ownership and possession of Lot 551-C which comprises an area of 46.97 hectares to his 14
grandchildren. They further assert that inasmuch as Lot 551-C had already been donated, the same can
no longer fall within the purview of P.D. No. 27, since each donee shall have a share of about three
hectares only which is within the exemption limit of seven hectares for each landowner provided under
P.D. No. 27.

Article 749 of the Civil Code provides inter alia that "in order that the donation of an immovable may be
valid, it must be made in a public document, specifying therein the property donated and the value of
the charges which the donee must satisfy." Corollarily, Article 709 of the same Code explicitly states that
"the titles of ownership, or other rights over immovable property, which are not duly inscribed or
annotated in the Registry of property shall not prejudice third persons." From the foregoing provisions,
it may be inferred that as between the parties to a donation of an immovable property, all that is
required is for said donation to be contained in a public document. Registration is not necessary for it to
be considered valid and effective. However, in order to bind third persons, the donation must be
registered in the Registry of Property (now Registry of Land Titles and Deeds). Although the non-
registration of a deed of donation shall not affect its validity, the necessity of registration comes into
play when the rights of third persons are affected, as in the case at bar.

It is actually the act of registration that operates to convey registered land or affect title thereto. Thus,
Section 50 of Act No. 496 (Land Registration Act), as amended by Section 51 of P.D. No. 1529 (Property
Registration Decree), provides:

SEC. 51. Conveyance and other dealings by registered owner - . . . But no deed, mortgage, lease,
or other voluntary instrument, except a will purporting to convey or affect registered land, shall
take effect as a conveyance or bind the land, but shall operate only as a contract between the
parties and as evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third
persons are concerned, . . .

Further, it is an entrenched doctrine in our jurisdiction that registration in a public registry creates
constructive notice to the whole world (Olizon vs. Court of Appeals, 236 SCRA 148 [1994]). Thus, Section
51 of Act No.496, as amended by Section 52 of P.D. No. 1529, provides:

SEC. 52. Constructive notice upon registration - Every conveyance, mortgage, lease, lien,
attachment, order, judgment, instrument or entry affecting registered land shall, if registered,
filed or entered in the Office of the Register of Deeds for the province or city where the land to
 which it relates lies, be constructive notice to all persons from the time of such registering, filing
or entering.
It is undisputed in this case that the donation executed by Ignacio Gonzales in favor of his grandchildren,
although in writing and duly notarized, has not been registered in accordance with law. For this reason,
it shall not be binding upon private respondents who did not participate in said deed or had no actual
knowledge thereof. Hence, while the deed of donation is valid between the donor and the donees, such
deed, however, did not bind the tenants-farmers who were not parties to the donation. As previously
enunciated by this Court, non-registration of a deed of donation does not bind other parties ignorant of
a previous transaction (Sales vs. Court of Appeals, 211 SCRA 858 [1992]). So it is of no moment that the
right of the tenants-farmers in this case was created by virtue of a decree or law. They are still
considered "third persons" contemplated in our laws on registration, for the fact remains that these
tenants-farmers had no actual knowledge of the deed of donation.

From the foregoing, the ineluctable conclusion drawn is that the unregistered deed of donation cannot
operate to exclude the subject land from the coverage of the Operation Land Transfer of P.D. No. 27,
which took effect on October 21, 1972. To rule otherwise would render ineffectual the rights and
interests that the tenants-farmers immediately acquired upon the promulgation of P.D. No. 27,
especially so because in the case at bar, they have been cultivating the land even before World War II.
Accordingly, the Certificates of Land Transfer and the Emancipation Patents respectively issued to
private respondents over the land in question cannot be cancelled. It should be noted that one of the
recognized modes of acquiring title to land is by emancipation patent which aims to ameliorate the sad
plight of tenants-farmers. By virtue of P.D. No. 27, tenants-farmers are deemed owners of the land they
till. This policy is intended to be given effect by a provision of the law which declares that, "the tenant-
farmer, whether in land classified as landed estate or not, shall be DEEMED OWNER of a portion
constituting a family size farm of five (5) hectares if not irritated and three (3) hectares if irrigated" (P.D.
No. 27, third paragraph). It may, therefore, be said that with respect to Lot 551-C, private respondents
became owners thereof on October 27, 1972, the day P.D. No. 27 took effect.
 Imperial vs. Court of Appeals
316 SCRA 393, G.R. No. 112483 October 8, 1999

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

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

Facts:
Leoncio Imperial was the registered owner of a parcel of land, also known as Lot 45. Leoncio sold the
said lot to his acknowledged natural son, petitioner herein, who then acquired title over the land and
proceeded to subdivide it into serveral lots. Petitioner and private respondents admit that despite the
contract’s designation as one of “Absolute Sale”, the transaction was in fact a donation. Two years after
the donation, Leoncio filed a complaint for annulment of the said Deed of Absolute Sale, on the ground
that he was deceived by petitioner into signing the said document. The dispute was resolved through a
compromise agreement, under which terms Leoncio recognized the legality and validity of the rights of
petitioner to the land donated and petitioner agreed to sell a designated portion of the land and deposit
the proceeds thereof in a back, for the convenient disposal of Leoncio. In case of Leoncio’s death, the
balance of the deposit will be withdrawn by petitioner to defray burial costs. Pending execution, Leoncio
died, leaving only two heirs, herein petitioner, who is his acknowledged natural son, and an adopted
son, Victor Imperial. Victor was substituted in plce of Leoncio in the abovementioned case, and it was he
who moved for execution of judgment.

Fifteen years thereafter, Victor died single and without issue, survived only by his natural father, Ricardo
Villalon, who was a lessee of a portion of the disputed land. Four years later, Ricardo died, leaving as his
only heirs his two children, Cesr and Teresa Villalon. Five years thereafter, Cesar and Teresa filed a
complaint for annulment of the donation. Petitioner moved to dismiss on the ground of res judicata, by
virtue of the compromise judgment. The trial court granted the motion to dismiss but hte CA reversed
the trial court’s order and remanded the case for further proceedings.

Cesra and Teresa filed an amended complaint in the same case for annulment of documents,
reconveyance, and recovery of possession, seeking nullification of the Deed of Absolute Sale affecting
the above property, on grounds of fraud, deceit and inofficiousness. It was alleged that petitioner
caused Leoncio to execute the donation by taking undue advantage of the latter’s physical weakness
and mental unfitness, and that the conveyance of said property in favor of petitioner impaired the
legitime of Victor. The RTC held the donation to be inofficious and impairing the legitime of Victor, on
the basis of its finding that at the time of Leoncio’s death, he left no property other than that parcel of
land which he had donated to petitioner. The trial court likewise held that the applicable prescriptive
period is 30 years under Article 1141 of the Civil Code, reckoned from the time the writ of execution of
the compromise judgment was issued. The CA affirmed the RTC decision in toto.

Issues:
(1) Whether or not respondents had a right to question the donation
(2) Whether or not respondents’ action is barred by prescription
(3) Whether or not the donation was inofficious and should be reduced

Ruling:
(1) Negative.

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

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

As argued by petitioner, when Leoncio died on January 8, 1962, it was only Victor who was entitled to
question the donation. However, instead of filing an action to contest the donation, Victor asked to be
substituted as plaintiff in Civil Case No. 1177 and even moved for execution of the compromise
judgment therein.

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

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

The repudiation of an inheritance shall be made in a public or authentic instrument, or by

petition presented to the court having jurisdiction over the testamentary or intestate
proceedings.

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

If the heir should die without having accepted or repudiated the inheritance, his right shall be
transmitted to his heirs.
Be that as it may, we find merit in petitioner's other assignment of errors. Having ascertained this action
as one for reduction of an inofficious donation, we cannot sustain the holding of both the trial court and
the Court of Appeals that the applicable prescriptive period is thirty years, under Article 1141 of the Civil
Code. The sense of both courts that this case is a "real action over an immovable" allots undue credence
to private respondents' description of their complaint, as one for "Annulment of Documents,
Reconveyance and Recovery of Possession of Property", which suggests the action to be, in part, a real
action enforced by those with claim of title over the disputed land.

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

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

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

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

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

(3) Affirmative.

A final word on collation of donations. We observe that after finding the donation to be inofficious
because Leoncio had no other property at the time of his death, the RTC computed the legitime of Victor
based on the area of the donated property. Hence, in its dispositive portion, it awarded a portion of the
property to private respondents as Victor's legitime. This was upheld by the Court of Appeals.
Our rules of succession require that before any conclusion as to the legal share due to a compulsory heir
may be reached, the following steps must be taken: (1) the net estate of the decedent must be
ascertained, by deducting all the payable obligations and charges from the value of the property owned
by the deceased at the time of his death; (2) the value of all donations subject to collation would be
added to it.

Thus, it is the value of the property at the time it is donated, and not the property itself, which is
brought to collation. Consequently, even when the donation is found inofficious and reduced to the
extent that it impaired Victor's legitime, private respondents will not receive a corresponding share in
the property donated. Thus, in this case where the collatable property is an immovable, what may be
received is: (1) an equivalent, as much as possible, in property of the same nature, class and quality;  (2)
if such is impracticable, the equivalent value of the impaired legitime in cash or marketable securities;  or
(3) in the absence of cash or securities in the estate, so much of such other property as may be
necessary, to be sold in public auction.
 Republic vs. Silim
356 SCRA 1, G.R. No. 140487 April 2, 2001

Doctrine: The purpose of the formal requirement for acceptance of a donation is to ensure that such
acceptance is duly communicated to the donor.

The actual knowledge by the donor of the construction and existence of the school building pursuant
to the condition of the donation fulfills the legal requirement that the acceptance of the donation by
the donee be communicated to the donor.

Facts:
In 1971, the spouses Silim donated a 5,600 square meter parcel of land in favor of the Bureau of Public
Schools, Municipality of Malangas, Zamboanga de Sur. In the Deed of Donation, the donors imposed the
condition that the said property should “be used exclusively and forever for school purposes only.” This
donation was accepted by the District Supervisor of BPS, through an Affi davit of Acceptance and/or
Confi rmation of Donation. Through a fund raising campaign by the Parents-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, the Assistant School Superintendent of the Province of
Zamboanga del Sur authorized the District Supervisor of the BPS to offi cially 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 fi t the specifi cations of the government. Pursuant to this, the District Supervisor
entered into a Deed of Exchange whereby the donated land was exchanged with a bigger lot.
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 the spouses Silim saw that a house was being constructed on the donated land, they fi led an
action for the cancellation and revocation of the donation. One of the arguments raised by the spouses
Silim was that the donation was void since the acceptance was not noted in the Deed of Donation.

Issue: Whether or not the donation is null and void due to an invalid acceptance by the donee

Ruling: Negative.

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:

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.

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.
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, 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.
 Gestopa vs. Court of Appeals
342 SCRA 105, G.R. No. 111904 October 5, 2000

Doctrine: Acceptance clause is a mark that the donation is inter vivos. Donations mortis causa, being
in the form of a will, are not required to be accepted by the donees during the donors’ lifetime.

A limitation on the right to sell during the donors’ lifetime implied that ownership had passed to the
donees and donation was already effective during the donors’ lifetime.

A valid donation, once accepted, becomes irrevocable, except on account of officiousness, failure by
the donee to comply with the charges imposed in the donation, or ingratitude.

Facts:
Spouses Diego and Catalina Danlag were the owners of six parcels of unregistered lands. They executed
three deeds of donation mortis causa in favor of private respondent Mercedes Danlag-Pilapil. The first
deed pertained to parcels 1 & 2; the second deed, to parcel 3 and the the last deed, to parcel 4. Diego
Danlag, with the consent of his wife executed a deed of donation inter vivos covering the
aforementioned parcels of land plus two other parcels, again in favor of private respondent Mercedes.
This contained two conditions, that (1) the Danlag spouses shall continue to enjoy the fruits of the land
during their lifetime, and that (2) the donee cannot sell or dispose of the land during the lifetime of the
said spouses, without their prior consent and approval.

Several years after, Diego and Catalina Danlag sold parcels 3 and 4 to herein petitioners, Mr. and Mrs.
Agripino Gestopa. The Danlags executed a deed of revocation recovering the six parcels of land subject
of the aforecited deed of donation inter vivos.

Mercedes Pilapil filed with the RTC a petition against the Gestopas and the Danlags, for quieting of title
over the above parcels of land. She alleged that she was an illegitimate daughter of Diego Danlag; that
she lived and rendered incalculable beneficial services to Diego and his mother, Maura Danlag, when the
latter was still alive. In recognition of the services she rendered, Diego executed a Deed of Donation,
conveying to her the six (6) parcels of land. She accepted the donation in the same instrument, and
caused the transfer of the tax declarations to her name. Said donation inter vivos was coupled with
conditions and, according to Mercedes, since its perfection, she had complied with all of them; that she
had not been guilty of any act of ingratitude; and that respondent Diego had no legal basis in revoking
the subject donation and then in selling the two parcels of land to the Gestopas.

In their opposition, the Gestopas and the Danlags averred that the deed of donation was null and void
because it was obtained by Mercedes through machinations and undue influence. Even assuming it was
validly executed, the intention was for the donation to take effect upon the death of the donor. In
finding for petitioners, the trial court observed that the reservation clause in all the deeds of donation
indicated that Diego Danlag did not make any donation; that Mercedes failed to rebut the allegations of
ingratitude she committed against Diego Danlag; and that Mercedes committed fraud and machination
in preparing all the deeds of donation without explaining to Diego Danlag their contents. The appellate
court reversed the trial court.
Issue: Whether or not the donor intended to transfer the ownership over the properties upon the
execution of the deed

Ruling: Affirmative.

In ascertaining the intention of the donor, all of the deed's provisions must be read together. The deed
of donation dated January 16, 1973, in favor of Mercedes contained the following:

"That for and in consideration of the love and affection which the Donor inspires in the Donee
and as an act of liberality and generosity, the Donor hereby gives, donates, transfer and conveys
by way of donation unto the herein Donee, her heirs, assigns and successors, the above-
described parcels of land;

That it is the condition of this donation that the Donor shall continue to enjoy all the fruits of the
land during his lifetime and that of his spouse and that the donee cannot sell or otherwise,
dispose of the lands without the prior consent and approval by the Donor and her spouse during
their lifetime.
xxx
That for the same purpose as hereinbefore stated, the Donor further states that he has reserved
for himself sufficient properties in full ownership or in usufruct enough for his maintenance of a
decent livelihood in consonance with his standing in society.

That the Donee hereby accepts the donation and expresses her thanks and gratitude for the
kindness and generosity of the Donor."

Note first that the granting clause shows that Diego donated the properties out of love and affection for
the donee. This is a mark of a donation inter vivos. Second, the reservation of lifetime usufruct indicates
that the donor intended to transfer the naked ownership over the properties. As correctly posed by the
Court of Appeals, what was the need for such reservation if the donor and his spouse remained the
owners of the properties? Third, the donor reserved sufficient properties for his maintenance in
accordance with his standing in society, indicating that the donor intended to part with the six parcels of
land. Lastly, the donee accepted the donation. In the case of Alejandro vs. Geraldez, 78 SCRA 245 (1977),
we said that an acceptance clause is a mark that the donation is inter vivos. Acceptance is a requirement
for donations inter vivos. Donations mortis causa, being in the form of a will, are not required to be
accepted by the donees during the donors' lifetime.

Consequently, the Court of Appeals did not err in concluding that the right to dispose of the properties
belonged to the donee. The donor's right to give consent was merely intended to protect his
usufructuary interests. In Alejandro, we ruled that a limitation on the right to sell during the donors'
lifetime implied that ownership had passed to the donees and donation was already effective during the
donors' lifetime.
The attending circumstances in the execution of the subject donation also demonstrated the real intent
of the donor to transfer the ownership over the subject properties upon its execution. Prior to the
execution of donation inter vivos, the Danlag spouses already executed three donations mortis causa. As
correctly observed by the Court of Appeals, the Danlag spouses were aware of the difference between
the two donations. If they did not intend to donate inter vivos, they would not again donate the four lots
already donated mortis causa. Petitioners' counter argument that this proposition was erroneous
because six years after, the spouses changed their intention with the deed of revocation, is not only
disingenious but also fallacious. Petitioners cannot use the deed of revocation to show the spouses'
intent because its validity is one of the issues in this case.

Petitioners aver that Mercedes' tax declarations in her name can not be a basis in determining the
donor's intent. They claim that it is easy to get tax declarations from the government offices such that
tax declarations are not considered proofs of ownership. However, unless proven otherwise, there is a
presumption of regularity in the performance of official duties. We find that petitioners did not
overcome this presumption of regularity in the issuance of the tax declarations. We also note that the
Court of Appeals did not refer to the tax declarations as proofs of ownership but only as evidence of the
intent by the donor to transfer ownership.

Petitioners assert that since private respondent purchased two of the six parcels of land from the donor,
she herself did not believe the donation was inter vivos. As aptly noted by the Court of Appeals,
however, it was private respondent's husband who purchased the two parcels of land.

As a rule, a finding of fact by the appellate court, especially when it is supported by evidence on record,
is binding on us. On the alleged purchase by her husband of two parcels, it is reasonable to infer that the
purchase was without private respondent's consent. Purchase by her husband would make the
properties conjugal to her own disadvantage. That the purchase is against her self-interest, weighs
strongly in her favor and gives credence to her claim that her husband was manipulated and unduly
influenced to make the purchase, in the first place.

Was the revocation valid? A valid donation, once accepted, becomes irrevocable, except on account of
officiousness, failure by the donee to comply with the charges imposed in the donation, or ingratitude.
The donor-spouses did not invoke any of these reasons in the deed of revocation. The deed merely
stated:

"WHEREAS, while the said donation was a donation Inter Vivos, our intention thereof is that of
Mortis Causa so as we could be sure that in case of our death, the above-described properties
will be inherited and/or succeeded by Mercedes Danlag de Pilapil; and that said intention is
clearly shown in paragraph 3 of said donation to the effect that the  Donee cannot dispose
and/or sell the properties donated during our life-time, and that we are the one enjoying all the
fruits thereof."

Petitioners cited Mercedes' vehemence in prohibiting the donor to gather coconut trees and her filing of
instant petition for quieting of title. There is nothing on record, however, showing that private
respondent prohibited the donors from gathering coconuts. Even assuming that Mercedes prevented
the donor from gathering coconuts, this could hardly be considered an act covered by Article 765 of the
Civil Code. Nor does this Article cover respondent's filing of the petition for quieting of title, where she
merely asserted what she believed was her right under the law.

Finally, the records do not show that the donor-spouses instituted any action to revoke the donation in
accordance with Article 769 of the Civil Code. Consequently, the supposed revocation on September 29,
1979, had no legal effect.
 Carinan vs. Cueto
738 SCRA 48, G.R. No. 198636 October 8, 2014

Doctrine: In order to sufficiently substantiate her claim that the money paid by the respondents was
actually a donation, Esperanza should have also submitted in court a copy of their written contract
evincing such agreement.

As the Court ruled in Moreño-Lentfer v. Wolff, a donation must comply with the mandatory formal
requirements set forth by law for its validity. When the subject of donation is purchase money, Article
748 of the NCC is applicable. Accordingly, the donation of money as well as its acceptance should be
in writing. Otherwise, the donation is invalid for non-compliance with the formal requisites prescribed
by law.

Facts:
The case originated from a complaint for specific performance with damages filed by Spouses Gavino C.
Cueto and Carmelita J. Cueto against Esperanza C. Carinan and her son, Jazer C. Carinan. The
respondents alleged that sometime in May 1986, Esperanza and her husband, Jose Carinan , acquired
from one Roberto Ventura the rights over a parcel of land formerly covered by TCT No. T-129128 under
the name of the GSIS, measuring 180 square meters and more particularly described as Lot 24, Block 20,
Juana Complex I, Biñan, Laguna. Their transaction was covered by a Deed of Assignment and Transfer of
Rights with Assumption of Obligations. Esperanza and Jose were to assume the payment of the
applicable monthly amortizations for the subject land to the GSIS.

Several amortizations remained unpaid by Esperanza and Jose, resulting in an impending cancellation in
2005 of GSIS’ conditional sale of the subject property to Roberto. It was then that Esperanza, then
already a widow, sought financial assistance from her brother, Gavino, in October 2005. The
respondents then paid from their conjugal savings Esperanza’s total obligation of P785,680.37 under the
subject deed of assignment.

The respondents alleged that Esperanza and Jazer undertook to execute a Deed of Absolute Sale in favor
of the respondents once the title over the subject property was transferred to their names, subject to
the condition that they would be given the first option to buy it back within three years by reimbursing
the expenses incurred by the respondents on the property. Besides satisfaction of the unpaid
amortizations to GSIS, the respondents paid for the transfer of the subject property from Roberto to
Esperanza, and the renovation of the residential house erected on the subject land, resulting in
additional expenses of P515,000.00. TCT No. T-636804 already under the name of Esperanza was
surrendered to the respondents. Sometime in 2006, the respondents demanded from Esperanza and
Jazer the fulfillment of their commitment to transfer the subject property to the respondents’ names
through the execution of a deed of sale. When Esperanza and Jazer failed to comply despite efforts for
an amicable settlement, the respondents filed with the RTC of Biñan, Laguna the subject complaint for
specific performance with damages.
The RTC of Biñan, Laguna, Branch 25 rendered its Decision in favor of the respondents. CA rendered its
Decision that affirmed the rulings of the RTC. The CA agreed with the RTC’s finding that the respondents’
payment of the GSIS obligation could not have been gratuitous, considering its substantial amount.

Issue: Whether or not the money paid by respondents was a donation

Ruling: Negative.
At the outset, the Court emphasizes that only questions of law may be raised in a petition for review on
certiorari. The Court is not a trier of facts. It is long settled that factual findings of the trial court, when
affirmed by the CA, will not be disturbed by this Court. Such findings by the lower courts are entitled to
great weight and respect, and are deemed final and conclusive on this Court when supported by
evidence on record.

Taking into account the foregoing rules, the Court adopts the RTC’s and CA’s finding that between
Esperanza and the respondents, there was a clear intention for a return of the amounts which the
respondents spent for the acquisition, transfer and renovation of the subject property. The respondents
then reasonably expected to get their money back from Esperanza. Esperanza’s claim that the expenses
and payments in her behalf were purely gratuitous remained unsupported by records. As the CA
correctly observed:

Indeed, the absence of intention to be reimbursed is negated by the facts of this case. [The
respondents’] conduct never at any time intimated any intention to donate in favor of
[Esperanza and Jazer]. A donation is a simple act of liberality where a person gives freely of a
thing or right in favor of another, who accepts it (Article 725, New Civil Code, as amended). But
when a large amount of money is involved, as in this case, this [c]ourt is constrained to take
[Esperanza and Jazer’s] claim of generosity by [the respondents] with more than a grain of salt.

Esperanza’s refusal to pay back would likewise result in unjust enrichment, to the clear disadvantage of
the respondents. "The main objective of the principle against unjust enrichment is to prevent one from
enriching himself at the expense of another without just cause or consideration." While Esperanza
claims that her brother’s generosity was the consideration for the respondents’ payment of her
obligations, this was not sufficiently established, that even the respondents vehemently denied the
allegation.

In order to sufficiently substantiate her claim that the money paid by the respondents was actually a
donation, Esperanza should have also submitted in court a copy of their written contract evincing such
agreement. Article 748 of the New Civil Code (NCC), which applies to donations of money, is explicit on
this point as it reads:

Art. 748. The donation of a movable may be made orally or in writing.

An oral donation requires the simultaneous delivery of the thing or of the document
representing the right donated.
 If the value of the personal property donated exceeds five thousand pesos, the donation and the
acceptance shall be made in writing. Otherwise, the donation shall be void.

As the Court ruled in Moreño-Lentfer v. Wolff, a donation must comply with the mandatory formal
requirements set forth by law for its validity. When the subject of donation is purchase money, Article
748 of the NCC is applicable. Accordingly, the donation of money as well as its acceptance should be in
writing. Otherwise, the donation is invalid for non-compliance with the formal requisites prescribed by
law.

The respondents’ statement that they paid for Esperanza’s obligations because they wanted to help her
did not contradict an understanding for the return of the claimed amounts. Clearly, the aid then needed
by Esperanza was for the immediate production of the money that could pay for her obligations to the
GSIS and effect transfer of title, in order that her payments and interest over the property would not be
forfeited. The help accorded by the respondents corresponded to such need. It did not follow that the
respondents could no longer be allowed to later demand the repayment. In disputing the claim against
her, Esperanza imputed deceit upon the respondents and claimed that they misled her into their real
intention behind the payment of her obligations and possession of TCT No. T-636804. Deceit, however,
is a serious charge which must be proven by more than just bare allegations.

Although the Court affirms the trial and appellate courts' ruling that, first, there was no donation in this
case and, second, the respondents are entitled to a return of the amounts which they spent for the
subject property, it still cannot sustain the respondents' plea for Esperanza's full conveyance of the
subject property. To impose the property's transfer to the respondents' names would totally disregard
Esperanza's interest and the payments which she made for the property's purchase. Thus, the principal
amount to be returned to the respondents shall only pertain to the amounts that they actually paid or
spent. The Court finds no cogent reason to disturb the trial court's resolve to require in its Decision
dated December 15, 2009, around four years after the sums were paid for the subject property's
acquisition and renovation, the immediate return of the borrowed amounts.

Esperanza's plea for a reversal of the lower courts' rulings upon her claim of co-ownership and allegation
that the respondents were builders in bad faith cannot be considered at this stage of the case. These
claims raise factual issues which are beyond the scope of a petition for review on certiorari. More
importantly, such defenses were not advanced by Esperanza during the proceedings with the trial and
appellate courts. Settled is the rule that "defenses not pleaded in the answer may not be raised for the
first time on appeal. A party cannot, on appeal, change fundamentally the nature of the issue in the
case. When a party deliberately adopts a certain theory and the case is decided upon that theory in the
court below, he will not be permitted to change the same on appeal, because to permit him to do so
would be unfair to the adverse party."
 Calanasan vs. Dolorito
710 SCRA 505, G.R. No. 171937 November 25, 2013

Doctrine: Under the old Civil Code, it is a settled rule that donations with an onerous cause are
governed not by the law on donations but by the rules on contracts. The same rules apply under the
New Civil Code as provided in Article 733 thereof.

An endowment for a valuable consideration partakes of the nature of an ordinary contract; hence, the
rules of contract will govern and Article 765 of the New Civil Code finds no application with respect to
the onerous portion of the donation.

Facts:
Petitioner Calanasan took care of her orphan niece Respondent Evelyn Dolorita since the latter was a
child. In 1982, when Evelyn was already married to Virgilio Dolorita, the petitioner donated to Evelyn a
parcel of land which had earlier been mortgaged for P15,000.00 subject to the conditions that Evelyn
must redeem the land and that the petitioner was entitled to possess and enjoy the property as long as
she lived. Evelyn accepted the donation and its terms in the same deed. Evelyn was able to fulfill the two
conditions set forth in the deed.

Petitioner, assisted by her sister Teodora Calanasan, filed a complaint that Evelyn had committed acts of
ingratitude against her. She prayed that her donation in favor of her niece be revoked; in their answer,
the respondents denied the commission of any act of ingratitude.The petitioner died while the case was
pending with the RTC. Her sisters, Teodora and Dolores Calanasan, substituted for her.

After the petitioner had rested her case, the respondents filed a demurrer to evidence. According to the
m the petitioner failed to prove that it was Evelyn who committed acts of ingratitude against the
petitioner.

The RTC ruled in favour of the respondents herein. On appeal, the CA affirmed the RTC’s decision but
with modification. The CA found that the donation was inter vivos and onerous thus should be governed
by the rules on ordinary contracts.

Issue: Whether or not Article 765 applies

Ruling: Negative.

Rules of contract govern the onerous portion of donation; rules of donation only apply to the excess, if
any.

In Republic of the Phils. v. Silim, we classified donations according to purpose. A pure/simple donation is
the truest form of donation as it is based on pure gratuity. The remuneratory/compensatory type has for
its purpose the rewarding of the donee for past services, which services do not amount to a demandable
debt. A conditional/modal donation, on the other hand, is a consideration for future services; it also
occurs where the donor imposes certain conditions, limitations or charges upon the donee, whose value
is inferior to the donation given. Lastly, an onerous donation imposes upon the donee a reciprocal
obligation; this is made for a valuable consideration whose cost is equal to or more than the thing
donated.

In De Luna v. Judge Abrigo, we recognized the distinct, albeit old, characterization of onerous donations
when we declared: Under the old Civil Code, it is a settled rule that donations with an onerous cause are
governed not by the law on donations but by the rules on contracts, as held in the cases of Carlos v.
Ramil L-6736, September 5, 1911, 20 Phil. 183, Manalo vs. de Mesa L-9449, February 12, 1915, 29 Phil.
495." In the same case, we emphasized the retention of the treatment of onerous types of donation,
thus: "The same rules apply under the New Civil Code as provided in Article 733 thereof which provides:

Article 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."

We agree with the CA that since the donation imposed on the donee the burden of redeeming the
property for ₱15,000.00, the donation was onerous. As an endowment for a valuable consideration, it
partakes of the nature of an ordinary contract; hence, the rules of contract will govern and Article 765 of
the New Civil Code finds no application with respect to the onerous portion of the donation.

Insofar as the value of the land exceeds the redemption price paid for by the donee, a donation exists,
and the legal provisions on donation apply. Nevertheless, despite the applicability of the provisions on
donation to the gratuitous portion, the petitioner may not dissolve the donation. She has no factual and
legal basis for its revocation, as aptly established by the RTC. First, the ungrateful acts were committed
not by the donee; it was her husband who committed them. Second, the ungrateful acts were
perpetrated not against the donor; it was the petitioner's sister who received the alleged ill treatments.
These twin considerations place the case out of the purview of Article 765 of the New Civil Code.
 Victoria vs. Pidlaoan
791 SCRA 16, G.R. No. 196470 April 20, 2016

Doctrine: There are two types of simulated documents — absolute and relative. A document is
absolutely simulated when the parties have no intent to bind themselves at all, while it is relatively
simulated when the parties concealed their true agreement. The true nature of a contract is
determined by the parties’ intention, which can be ascertained from their contemporaneous and
subsequent acts.

Facts:
The petitioners Rosario Victoria and Elma lived together since 1978 until Rosario left for Saudi Arabia. In
1984, Elma bought a parcel of land in Lucena City and was issued Transfer Certificate of Title. When
Rosario came home, she caused the construction of a house on the lot but she left again after the house
was built. Elma allegedly mortgaged the house and lot. When the properties were about to be
foreclosed, Elma allegedly asked for help from her sister-in-law, Eufemia Pidlaoan, to redeem the
property. On her part, Eufemia called her daughter abroad, Normita, to lend money to Elma. Normita
agreed to provide the funds. Elma allegedly sought to sell the land. When she failed to find a buyer, she
offered to sell it to Eufemia or her daughter. Thereafter, Elma executed a deed of sale entitled
"Panananto ng Pagkatanggap ng Kahustuhang Bayad" transferring the ownership of the lot to Normita.
The document was signed by Elma, Normita, and two witnesses but it was not notarized. When Elma
and Normita were about to have the document notarized, the notary public advised them to donate the
lot instead to avoid capital gains tax. On the next day, Elma executed a deed of donation in Normita's
favor and had it notarized. TCT No. T-50282 was cancelled and TCT No. T-70990 was issued in Normita's
name. Since then, Normita had been paying the real property taxes over the lot but Elma continued to
occupy the house. Rosario found out about the donation and petitioners filed a complaint for
reformation of contract, cancellation of TCT, and damages with prayer for preliminary injunction against
respondents.

The petitioners argue that the deed of donation was simulated and that the parties entered into an
equitable mortgage. On the other hand, the respondents deny the claim of equitable mortgage and
argue that they validly acquired the property via sale. The RTC ruled that there was donation but only as
to half of the property. The CA agreed with the respondents that the deed of donation was not
simulated, relying on the presumption of regularity of public documents.

Issue: Whether or not the deed of donation was simulated

Ruling: Affirmative.

We find that the deed of donation was simulated and the parties' real intent was to enter into a sale.

The petitioners argue that the deed of donation was simulated and that the parties entered into an
equitable mortgage. On the other hand, the respondents deny the claim of equitable mortgage  and
argue that they validly acquired the property via sale. The RTC ruled that there was donation but only as
to half of the property. The CA agreed with the respondents that the deed of donation was not
simulated, relying on the presumption of regularity of public documents.

We first dwell on the genuineness of the deed of donation. There are two types of simulated documents
- absolute and relative. A document is absolutely simulated when the parties have no intent to bind
themselves at all, while it is relatively simulated when the parties concealed their true agreement. The
true nature of a contract is determined by the parties' intention, which can be ascertained from their
contemporaneous and subsequent acts.

In the present case, Elma and Normita's contemporaneous and subsequent acts show that they were
about to have the contract of sale notarized but the notary public ill-advised them to execute a deed of
donation instead. Following this advice, they returned the next day to have a deed of donation
notarized. Clearly, Elma and Normita intended to enter into a sale that would transfer the ownership of
the subject matter of their contract but disguised it as a donation. Thus, the deed of donation
subsequently executed by them was only relatively simulated.

The CA upheld the deed of donation's validity based on the principle that a notarized document enjoys
the presumption of regularity. This presumption, however, is overthrown in this case by the
respondents' own admission in their answer that the deed of donation was simulated.

Judicial admissions made by a party in the course of the proceedings are conclusive and do not require
proof. Notably, the respondents explicitly recognized in their answer that the deed of donation was
simulated upon the notary public's advice and that both parties intended a sale.

In paragraphs 5 and 6 of the answer, the respondents stated thus:

5. That defendants admit the allegations in paragraph 9 which readily acknowledges that there
was indeed an agreement to sell the property of plaintiff, Elma Pidlaoan to defendant, Normita
Pidlaoan (Normita, for brevity) for which a Deed of Absolute Sale was drafted and executed;

6. That defendants admit the simulation of the Deed of Donation in paragraph 10 of the

Complaint, but deny the remainder, the truth being that Elma Pidlaoan herself offered her
property for sale in payment of her loans from Normita. (Emphasis supplied)

Having admitted the simulation, the respondents can no longer deny it at this stage. The CA erred in
disregarding this admission and upholding the validity of the deed of donation.

Considering that the deed of donation was relatively simulated, the parties are bound to their real
agreement. The records show that the parties intended to transfer the ownership of the property to
Normita by absolute sale. This intention is reflected in the unnotarized document entitled "Panananto
ng Pagkatanggap ng Kahustuhang Bayad."

We have discussed that the transaction was definitely not one of donation. Next, we determine whether
the parties' real transaction was a sale or an equitable mortgage.
The petitioners insist that the deed of sale is an equitable mortgage because: (i) the consideration for
the sale was grossly inadequate; (ii) they remained in possession of the property; (iii) they continuously
paid the water and electric bills; (iv) the respondents allowed Victoria to repay the "loan" within three
months; (v) the respondents admitted that the deed of donation was simulated; and (vi) the petitioners
paid the taxes even after the sale.

Notably, neither the CA nor the RTC found merit in the petitioners' claim of equitable mortgage. We find
no reason to disagree with these conclusions.

An equitable mortgage is one which, although lacking in some formality or other requisites demanded
by statute, nevertheless reveals the intention of the parties to charge real property as security for a
debt, and contains nothing impossible or contrary to law. Articles 1602 and 1604 of the Civil Code
provide that a contract of absolute sale shall be presumed an equitable mortgage if any of the
circumstances listed in Article 1602 is attendant.

Two requisites must concur for Articles 1602 and 1604 of the Civil Code to apply:  one, the parties
entered into a contract denominated as a contract of sale; and two, their intention was to secure an
existing debt by way of mortgage.

In the present case, the unnotarized contract of sale between Elma and Normita is denominated as
"Panananto ng Pagkatanggap ng Kahustuhang Bayad." Its contents show an unconditional sale of
property between Elma and Normita. The document shows no intention to secure a debt or to grant a
right to repurchase. Thus, there is no evidence that the parties agreed to mortgage the property as
contemplated in Article 1602 of the Civil Code. Clearly, the contract is not one of equitable mortgage.

Even assuming that Article 1602 of the Civil Code applies in this case, none of the circumstances are
present to give rise to the presumption of equitable mortgage. One, the petitioners failed to
substantiate their claim that the sale price was unusually inadequate. In fact, the sale price of
P30,000.00 is not unusually inadequate compared with the lot's market value of P32,160 as stated in the
1994 tax declaration. Two, the petitioners continued occupation on the property was coupled with the
respondents' continuous demand for them to vacate it. Third, no other document was executed for the
petitioners to repurchase the lot after the sale contract was executed. Finally, the respondents paid the
real property taxes on the lot. These circumstances contradict the petitioners' claim of equitable
mortgage.

A review of the sale contract or the "Panananto ng Pagkatanggap ng Kahustuhang Bayad" shows that
the parties intended no equitable mortgage. The contract even contains Elma's undertaking to remove
Rosario's house on the property. This undertaking supports the conclusion that the parties executed the
contract with the end view of transferring full ownership over the lot to Normita.

In sum, we rule that based on the records of the case, Elma and Normita entered in a sale contract, not
a donation. Elma sold the entire property to Normita. Accordingly, TCT No. T-70990 was validly issued in
Normita's name.
 Heirs of Rafael Gozo vs. Philippine Union Mission Corporation of the
Seventh Day Adventist Church
765 SCRA 304, G.R. No. 195990 August 5, 2015

Doctrine: It is clear under the law that before compliance with the conditions and requirements, the
applicant for homestead has no right over the land subject of the patent and therefore cannot
dispose the same even if such disposal was made gratuitously. It is an established principle that no
one can give what one does not have, nemo dat quod non habet. It is true that gratuitous disposal in
donation may consist of a thing or a right but the term right must be understood in a “proprietary”
sense over which the possessor has jus disponendi. This is because in true donations there results a
consequent impoverishment of the donor or diminution of his assets.

Facts:
Petitioners claim that they are the heirs of the spouses Rafael and Concepcion Gozo, who before their
death were original owners of a parcel of land in Kolambugan, Lanao del Norte. Respondents claim that
they own a 5,000sqm portion of the property. The assertion is based on a Deed of Donation in favor of
respondent. Respondents took possession of the property by introducing improvements thereon. On
the date the Deed of Donation is executed, the spouses Gozo were not the registered owners of the
property yet, although they were lawful possessors thereof. It was only later that the certificate of title
was issued in the name of Rafael Gozo married to Concepcion Gozo pursuant to the Homestead Patent
granted by the President. In view of Rafael’s death, his heirs Concepcion and their six children caused
the extrajudicial partition of the property. Accordingly, new certificate of titles were issued under the
name of the heirs.

Concepcion thereafter caused the survey and subdivision of the entire property including the portion
occupied by respondent. It was at this point that respondents brought to the attention of Concepcion
that the 5,000sqm portion of the property is already owned by respondent in view of the deed of
donation she executed together with her husband. However, when Concepcion verified the matter with
the Register of Deeds, it appeared that the donation was not annotated in the title. Such absence of
annotation prompted petitioenr not to recognize the donation claimed by respondents. The matter was
left unresolved until Concepcion died and the rest of the owners continued to pursue their claims to
recover the subject property.

A compromise was initially reached by the parties wherein the petitioners were allowed by respondents
to harvest from the coconut trees planted on the subject property but a misunderstanding ensued
causing respondents to file a case for qualified theft against the petitioners. Decades after the deed of
donation was executed, petitioner filed an action for declaration of nullity of document, recovery of
possession and ownership with damages against respondents, claiming that possession of respondents
on the subject property was merely tolerated by petitioners and therefore could not ripen into
ownership. In addition, petitioners argue that the donation will remain invalid for lack of acceptance
which is an essential requisite for a valid contract of donation. For their part, respondents insisted on th
validity of the donation and further contended that from the moment the spouses Gozo delivered the
property to respondents, they were already in open, public, continuous and adverse possession thereof
in the concept of an owner. Further, the argument that the donation was invalid for lack of acceptance
is barred by laches being raised only after 63 years after the donation was executed.

The RTC ruled in favor of petitioners and declared them the rightful owners of the property since the
donation is void for lack of acceptance. It further held that an action or defense for the declaration of
nulity of a contract does not prescribe, and that the action of the registered owners to recover
possession, which is based on Torrens title, cannot be barred by laches. On appeal, the CA reversed the
RTC decision and dismissed the complaint on the ground of laches. It held that petitioners failed to
assert their rights over the land for more than 60 years, thus laches had set in. Hence, the instant
petition.

Issue: Whether or not the deed of donation was valid

Ruling: Negative.

A careful scrutiny of the records, however, reveals a significant fact that at the time the Deed of
Donation was executed by the Spouses Gozo on 28 February 1937, the subject property was part of the
inalienable public domain. It was only almost after two decades later or on 5 October 1953 that the
State ceded its right over the land in favor of the Spouses Gozo by granting their patent application and
issuing an original certificate of title in their favor. Prior to such conferment of title, the Spouses Gozo
possessed no right to dispose of the land which, by all intents and purposes, belongs to the State.

Under the Regalian doctrine, which is embodied in Article XII, Section 2 of our Constitution, all lands of
the public domain belong to the State, which is the source of any asserted right to any ownership of
land. All lands not appearing to be clearly within private ownership are presumed to belong to the State.
Accordingly, public lands not shown to have been reclassified or released as alienable agricultural land
or alienated to a private person by the State remain part of the inalienable public domain.

The classification of public lands is an exclusive prerogative of the executive department of the
government and not the Courts. In the absence of such classification, the land remains as an unclassified
land until it is released therefrom and rendered open to disposition. This is in consonance with the
Regalian doctrine that all lands of the public domain belong to the State and that the State is the source
of any asserted right to ownership in land and charged with the conservation of such patrimony.

All lands not appearing to be clearly within private ownership are presumed to belong to the State.
Accordingly, all public lands not shown to have been reclassified or released as alienable agricultural
land or alienated to a private person by the State remain part of the alienable public domain. As already
well-settled in jurisprudence, no public land can be acquired by private persons without any grant,
express or implied, from the government; and it is indispensable that the person claiming title to public
land should show that his title was acquired from the State or any other mode of acquisition recognized
by law. To prove that the land subject of an application for registration is alienable, the applicant must
establish the existence of a positive act of the government such as a presidential proclamation or an
executive order, an administrative action, investigation reports of Bureau of Lands investigators, and a
legislative act or a statute. The applicant may also secure a certification from the Government that the
land applied for is alienable and disposable.

Commonwealth Act No. 141, also known as the Public Land Act, as amended by Presidential Decree No.
1073, remains to this day the existing general law governing the classification and disposition of lands of
the public domain, other than timber and mineral lands. The following provisions under Title I, Chapter II
of the Public Land Act, as amended, is very specific on how lands of the public domain become alienable
or disposable:

SEC. 6. The President, upon the recommendation of the Secretary of Agriculture and Natural
Resources, shall from time to time classify the lands of the public domain into:
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,

and may at any time and in a like manner transfer such lands from one class to another, for the
purposes of their administration and disposition.

SEC. 7. For the purposes of the administration and disposition of alienable or disposable public
lands, the Batasang Pambansa or the President, upon recommendation by the Secretary of Natural
Resources, may from time to time declare what public lands are open to disposition or concession
under this Act.
xxxx
SEC. 8. Only those lands shall be declared open to disposition or concession which have been
officially delimited and classified and, when practicable, surveyed, and which have not been
reserved for public or quasi-public uses, nor appropriated by the Government, nor in any manner
become private property, nor those on which a private right authorized and recognized by this Act
or any other valid law may be claimed, or which, having been reserved or appropriated, have ceased
to be so. However, the President may, for reasons of public interest, declare lands of the public
domain open to disposition before the same have had their boundaries established or been
surveyed, or may, for the same reason, suspend their concession or disposition until they are again
declared open to concession or disposition by proclamation duly published or by Act of the
Congress.

SEC. 9. For the purpose of their administration and disposition, the lands of the public domain
alienable or open to disposition shall be classified, according to the use or purposes to which such
lands are destined, as follows:chanRoblesvirtualLawlibrary
(a) Agricultural
(b) Residential,  commercial,  industrial,  or  for  similar productive purposes;
(c) Educational, charitable, or other similar purposes; and
(d) Reservations for townsites and for public and quasi-public uses.
 The President, upon recommendation by the Secretary of Agriculture and Natural Resources, shall
from time to time make the classifications provided for in this section, and may, at any time and in a
similar manner, transfer lands from one class to another.

By virtue of Presidential Decree No. 705, otherwise known as the Revised Forestry Code, the President
delegated to the DENR Secretary the power to determine which of the unclassified lands of the public
domain are (1) needed for forest purposes and declare them as permanent forest to form part of the
forest reserves; and (2) not needed for forest purposes and declare them as alienable and disposable
lands.

Per the Public Land Act, alienable and disposable public lands suitable for agricultural purposes can be
disposed of only as follows:
1. For homestead settlement;
2. By sale;
3. By lease; and
4. By confirmation of imperfect or incomplete titles:
a. By judicial legalization;
b. By administrative legalization (free patent).

Homestead over alienable and disposable public agricultural land is granted after compliance by an
applicant with the conditions and requirements laid down under Title II, Chapter IV of the Public Land
Act, the most basic of which are quoted below:

SEC. 12. Any citizen of the Philippines over the age of eighteen years, or the head of a family,
who does not own more than twenty-four hectares of land in the Philippines or has not had the
benefit of any gratuitous allotment of more than twenty-four hectares of land since the
occupation of the Philippines by the United States, may enter a homestead of not exceeding
twenty-four hectares of agricultural land of the public domain.

SEC. 13. Upon the filing of an application for a homestead, the Director of Lands, if he finds that
the application should be approved, shall do so and authorize the applicant to take possession
of the land upon the payment of five pesos, Philippine currency, as entry fee. Within six months
from and after the date of the approval of the application, the applicant shall begin to work the
homestead, otherwise he shall lose his prior right to the land.

SEC. 14. No certificate shall be given or patent issued for the land applied for until at least one-
fifth of the land has been improved and cultivated. The period within which the land shall be
cultivated shall not be less than one nor more than five years, from and after the date of the
approval of the application. The applicant shall, within the said period, notify the Director of
Lands as soon as he is ready to acquire the title. If at the date of such notice, the applicant shall
prove to the satisfaction of the Director of Lands, that he has resided continuously for at least
one year in the municipality in which the land is located, or in a municipality adjacent to the
same and has cultivated at least one-fifth of the land continuously since the approval of the
application, and shall make affidavit that no part of said land has been alienated or encumbered,
 and that he has complied with all the requirements of this Act, then, upon the payment of five
pesos, as final fee, he shall be entitled to a patent.

It is clear under the law that before compliance with the foregoing conditions and requirements the
applicant has no right over the land subject of the patent and therefore cannot dispose the same even if
such disposal was made gratuitously. It is an established principle that no one can give what one does
not have, nemo dat quod non habet. It is true that gratuitous disposal in donation may consist of a thing
or a right but the term right must be understood in a "proprietary" sense over which the possessor
has jus disponendi. This is because in true donations there results a consequent impoverishment of the
donor or diminution of his assets. In Republic v. Court of Appeals, the Court declared the contract of
donation, executed by the donor who has no proprietary right over the object of the contract, null and
void, viz:

Even on the gratuitous assumption that a donation of the military "camp site" was executed
between Eugenio de Jesus and Serafin Marabut, such donation would anyway be void because
Eugenio de Jesus held no dominical rights over the site when it was allegedly donated by
him in 1936. In that year, Proclamation No. 85. of President Quezon already withdrew the area
from sale or settlement and reserved it for military purposes, x x x Eugenio de Jesus cannot be
said to be possessed of that "proprietary" right over the whole 33 hectares in 1936 including the
disputed 12.8081 hectares for at the time this 12.8081-hectare lot had already been severed
from the mass disposable public lands by Proclamation No. 85 and excluded from the Sales
Award. Impoverishment of Eugenio's asset as a result of such donation is therefore farfetched.

It is beyond question that at the time the gratuitous transfer was effected by the Spouses Gozo on 28
February 1937, the subject property was part of the public domain and is outside the commerce of man.
It was only on 5 October 1953 that the ownership of the property was vested by the State to the
Spouses Gozo by virtue of its issuance of the OCT pursuant to the Homestead Patent granted by the
President of the Philippines on 22 August 1953. Hence, the donation of the subject property which took
place before 5 October 1953 is null and void from the very start.

As a void contract, the Deed of Donation produces no legal effect whatsoever.  Quod nullum est, nullum
producit effectum – That which is a nullity produces no effect. Logically, it could not have transferred
title to the subject property from the Spouses Gozo to PUMCO-SDA and there can be no basis for the
church's demand for the issuance of title under its name. Neither does the church have the right to
subsequently dispose the property nor invoke acquisitive prescription to justify its occupation. A void
contract is not susceptible to ratification, and the action for the declaration of absolute nullity of such
contract is imprescriptible.

The lack of respondents' right over the property was confirmed when the Spouses Gozo had the entire
property, including the portion occupied by the church, surveyed and patented, and covered by their
homestead patent. Further, after a certificate of title was issued under their names, the Spouses Gozo
did not effect the annotation thereon of the supposed donation. Registration is the operative act that
gives validity to the transfer or creates a lien upon the land. Indeed it has been ruled that where there
was nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or
any encumbrance thereon, the purchaser is not required to explore farther than what the Torrens title
upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his
right thereto. If the rule were otherwise, the efficacy and conclusiveness of the certificate of title which
the Torrens system seeks to insure would entirely be futile and nugatory. The public shall then be
denied of its foremost motivation for respecting and observing the Land Registration Act.

Just as significantly, the homestead application of the Spouses Gozo over the entire area of the property
including that occupied by respondents and the issuance in their favor of the corresponding title without
any complaint or objection from the respondents, remove the case of the petitioners from the operation
of the doctrine of laches.

And, further than the issuance of an original title, the entire property was made subject of an
extrajudicial partition of the property by the Gozo heirs resulting in the issuance of TCTs in their names
in 1954. Again, in no instance during the partition did the respondents make known their claim over the
property.

Clearly from the facts, the petitioners asserted their rights repeatedly; it was the respondents who kept
silent all throughout about the supposed donee's rights.