Cases on donations Article 725 G.R. No.

120721 February 23, 2005

MANUEL G. ABELLO, JOSE C. CONCEPCION, TEODORO D. REGALA, AVELINO V. CRUZ, petitioners, vs. COMMISSIONER OF INTERNAL REVENUE and COURT OF APPEALS, respondents. DECISION AZCUNA, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure, assailing the decision of the Court of Appeals in CA G.R. SP No. 27134, entitled "Comissioner of Internal Revenue v. Manuel G. Abello, Jose C. Concepcion, Teodoro D. Regala, Avelino V. Cruz and Court of Tax Appeals," which reversed and set aside the decision of the Court of Tax Appeals (CTA), ordering the Commissioner of Internal Revenue (Commissioner) to withdraw his letters dated April 21, 1988 and August 4, 1988 assessing donors taxes and to desist from collecting donors taxes from petitioners. During the 1987 national elections, petitioners, who are partners in the Angara, Abello, Concepcion, Regala and Cruz (ACCRA) law firm, contributed P882,661.31 each to the campaign funds of Senator Edgardo Angara, then running for the Senate. In letters dated April 21, 1988, the Bureau of Internal Revenue (BIR) assessed each of the petitioners P263,032.66 for their contributions. On August 2, 1988, petitioners questioned the assessment through a letter to the BIR. They claimed that political or electoral contributions are not considered gifts under the National Internal Revenue Code (NIRC), and that, therefore, they are not liable for donors tax. The claim for exemption was denied by the Commissioner.11vvphi1.nt On September 12, 1988, petitioners filed a petition for review with the CTA, which was decided on October 7, 1991 in favor of the petitioners. As aforestated, the CTA ordered the Commissioner to desist from collecting donors taxes from the petitioners. 2 On appeal, the Court of Appeals reversed and set aside the CTA decision on April 20, 1994.3 The appellate Court ordered the petitioners to pay donors tax amounting to P263,032.66 each, reasoning as follows: The National Internal Revenue Code, as amended, provides: Sec. 91. Imposition of Tax. (a) There shall be levied, assessed, collected, and paid upon the transfer by any person, resident, or non-resident, of the property by gift, a tax,

computed as provided in Section 92. (b) The tax shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible. Pursuant to the above-quoted provisions of law, the transfer of property by gift, whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible, is subject to donors or gift tax. A gift is generally defined as a voluntary transfer of property by one to another without any consideration or compensation therefor (28 C.J. 620; Santos vs. Robledo, 28 Phil. 250). In the instant case, the contributions are voluntary transfers of property in the form of money from private respondents to Sen. Angara, without considerations therefor. Hence, they squarely fall under the definition of donation or gift. As correctly pointed out by the Solicitor General: The fact that the contributions were given to be used as campaign funds of Sen. Angara does not affect the character of the fund transfers as donation or gift. There was thereby no retention of control over the disposition of the contributions. There was simply an indication of the purpose for which they were to be used. For as long as the contributions were used for the purpose for which they were intended, Sen. Angara had complete and absolute power to dispose of the contributions. He was fully entitled to the economic benefits of the contributions. Section 91 of the Tax Code is very clear. A donors or gift tax is imposed on the transfer of property by gift.1awphi1.nt The Bureau of Internal Revenue issued Ruling No. 344 on July 20, 1988, which reads: Political Contributions. For internal revenue purposes, political contributions in the Philippines are considered taxable gift rather than taxable income. This is so, because a political contribution is indubitably not intended by the giver or contributor as a return of value or made because of any intent to repay another what is his due, but bestowed only because of motives of philanthropy or charity. His purpose is to give and to bolster the morals, the winning chance of the candidate and/or his party, and not to employ or buy. On the other hand, the recipient-donee does not regard himself as exchanging his services or his product for the money contributed. But more importantly he receives financial advantages gratuitously. When the U.S. gift tax law was adopted in the Philippines (before May 7, 1974), the taxability of political contributions was, admittedly, an unsettled issue; hence, it cannot be presumed that the Philippine Congress then had intended to consider or treat political contributions as non-taxable gifts when it adopted the said gift tax law. Moreover, well-settled is the rule that the Philippines need not necessarily adopt the

present rule or construction in the United States on the matter. Generally, statutes of different states relating to the same class of persons or things or having the same purposes are not considered to be in pari materia because it cannot be justifiably presumed that the legislature had them in mind when enacting the provision being construed. (5206, Sutherland, Statutory Construction, p. 546.) Accordingly, in the absence of an express exempting provision of law, political contributions in the Philippines are subject to the donors gift tax. (cited in National Internal Revenue Code Annotated by Hector S. de Leon, 1991 ed., p. 290). In the light of the above BIR Ruling, it is clear that the political contributions of the private respondents to Sen. Edgardo Angara are taxable gifts. The vagueness of the law as to what comprise the gift subject to tax was made concrete by the above-quoted BIR ruling. Hence, there is no doubt that political contributions are taxable gifts.4 Petitioners filed a motion for reconsideration, which the Court of Appeals denied in its resolution of June 16, 1995.5 Petitioners thereupon filed the instant petition on July 26, 1995. Raised are the following issues: 1. DID THE HONORABLE COURT OF APPEALS ERR WHEN IT FAILED TO CONSIDER IN ITS DECISION THE PURPOSE BEHIND THE ENACTMENT OF OUR GIFT TAX LAW? 2. DID THE HONORABLE COURT OF APPEALS ERR IN NOT CONSIDERING THE INTENTION OF THE GIVERS IN DETERMINING WHETHER OR NOT THE PETITIONERS POLITICAL CONTRIBUTIONS WERE GIFTS SUBJECT TO DONORS TAX? 3. DID THE HONORABLE COURT OF APPEALS ERR WHEN IT FAILED TO CONSIDER THE DEFINITION OF AN "ELECTORAL CONTRIBUTION" UNDER THE OMNIBUS ELECTION CODE IN DETERMINING WHETHER OR NOT POLITICAL CONTRIBUTIONS ARE TAXABLE? 4. DID THE HONORABLE COURT OF APPEALS ERR IN NOT CONSIDERING THE ADMINISTRATIVE PRACTICE OF CLOSE TO HALF A CENTURY OF NOT SUBJECTING POLITICAL CONTRIBUTIONS TO DONORS TAX? 5. DID THE HONORABLE COURT OF APPEALS ERR IN NOT CONSIDERING THE AMERICAN JURISPRUDENCE RELIED UPON BY THE COURT OF TAX APPEALS AND BY THE PETITIONERS TO THE EFFECT THAT POLITICAL CONTRIBUTIONS ARE NOT TAXABLE GIFTS? 6. DID THE HONORABLE COURT OF APPEALS ERR IN NOT APPLYING AMERICAN JURISPRUDENCE ON THE GROUND THAT THIS WAS NOT

KNOWN AT THE TIME THE PHILIPPINES GIFT TAX LAW WAS ADOPTED IN 1939? 7. DID THE HONORABLE COURT OF APPEALS ERR IN RESOLVING THE CASE MAINLY ON THE BASIS OF A RULING ISSUED BY THE RESPONDENT ONLY AFTER THE ASSESSMENTS HAD ALREADY BEEN MADE? 8. DID THE HONORABLE COURT OF APPEALS ERR WHEN IT DID NOT CONSTRUE THE GIFT TAX LAW LIBERALLY IN FAVOR OF THE TAXPAYER AND STRICLTY AGAINST THE GOVERNMENT IN ACCORDANCE WITH APPLICABLE PRINCIPLES OF STATUTORY CONSTRUCTION?6 First, Fifth and Sixth Issues Section 91 of the National Internal Revenue Code (NIRC) reads: (A) There shall be levied, assessed, collected and paid upon the transfer by any person, resident or nonresident, of the property by gift, a tax, computed as provided in Section 92 (B) The tax shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible. The NIRC does not define transfer of property by gift. However, Article 18 of the Civil Code, states: In matters which are governed by the Code of Commerce and special laws, their deficiency shall be supplied by the provisions of this Code. Thus, reference may be made to the definition of a donation in the Civil Code. Article 725 of said Code defines donation as: . . . an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it. Donation has the following elements: (a) the reduction of the patrimony of the donor; (b) the increase in the patrimony of the donee; and, (c) the intent to do an act of liberality or animus donandi.7 The present case falls squarely within the definition of a donation. Petitioners, the late Manuel G. Abello8 , Jose C. Concepcion, Teodoro D. Regala and Avelino V. Cruz, each gave P882,661.31 to the campaign funds of Senator Edgardo Angara, without any material consideration. All three elements of a donation are present. The patrimony of the four petitioners were reduced by P882,661.31 each. Senator Edgardo Angaras patrimony correspondingly increased by P3,530,645.249 . There was intent to do an act

of liberality or animus donandi was present since each of the petitioners gave their contributions without any consideration. Taken together with the Civil Code definition of donation, Section 91 of the NIRC is clear and unambiguous, thereby leaving no room for construction. In Rizal Commercial Banking Corporation v. Intermediate Appellate Court10 the Court enunciated: It bears stressing that the first and fundamental duty of the Court is to apply the law. When the law is clear and free from any doubt or ambiguity, there is no room for construction or interpretation. As has been our consistent ruling, where the law speaks in clear and categorical language, there is no occasion for interpretation; there is only room for application (Cebu Portland Cement Co. v. Municipality of Naga, 24 SCRA 708 [1968]) Where the law is clear and unambiguous, it must be taken to mean exactly what it says and the court has no choice but to see to it that its mandate is obeyed (Chartered Bank Employees Association v. Ople, 138 SCRA 273 [1985]; Luzon Surety Co., Inc. v. De Garcia, 30 SCRA 111 [1969]; Quijano v. Development Bank of the Philippines,35 SCRA 270 [1970]). Only when the law is ambiguous or of doubtful meaning may the court interpret or construe its true intent.l^vvphi1.netAmbiguity is a condition of admitting two or more meanings, of being understood in more than one way, or of referring to two or more things at the same time. A statute is ambiguous if it is admissible of two or more possible meanings, in which case, the Court is called upon to exercise one of its judicial functions, which is to interpret the law according to its true intent. Second Issue Since animus donandi or the intention to do an act of liberality is an essential element of a donation, petitioners argue that it is important to look into the intention of the giver to determine if a political contribution is a gift. Petitioners argument is not tenable. First of all, donative intent is a creature of the mind. It cannot be perceived except by the material and tangible acts which manifest its presence. This being the case, donative intent is presumed present when one gives a part of ones patrimony to another without consideration. Second, donative intent is not negated when the person donating has other intentions, motives or purposes which do not contradict donative intent. This Court is not convinced that since the purpose of the contribution was to help elect a candidate, there was no donative intent. Petitioners contribution of money without any material consideration evinces animus donandi. The fact that their purpose for donating was to aid in the election of the donee does not negate the presence of donative intent. Third Issue

Petitioners maintain that the definition of an "electoral contribution" under the Omnibus Election Code is essential to appreciate how a political contribution differs from a taxable gift.11 Section 94(a) of the said Code defines electoral contribution as follows: The term "contribution" includes a gift, donation, subscription, loan, advance or deposit of money or anything of value, or a contract, promise or agreement to contribute, whether or not legally enforceable, made for the purpose of influencing the results of the elections but shall not include services rendered without compensation by individuals volunteering a portion or all of their time in behalf of a candidate or political party. It shall also include the use of facilities voluntarily donated by other persons, the money value of which can be assessed based on the rates prevailing in the area. Since the purpose of an electoral contribution is to influence the results of the election, petitioners again claim that donative intent is not present. Petitioners attempt to place the barrier of mutual exclusivity between donative intent and the purpose of political contributions. This Court reiterates that donative intent is not negated by the presence of other intentions, motives or purposes which do not contradict donative intent. Petitioners would distinguish a gift from a political donation by saying that the consideration for a gift is the liberality of the donor, while the consideration for a political contribution is the desire of the giver to influence the result of an election by supporting candidates who, in the perception of the giver, would influence the shaping of government policies that would promote the general welfare and economic well-being of the electorate, including the giver himself. Petitioners attempt is strained. The fact that petitioners will somehow in the future benefit from the election of the candidate to whom they contribute, in no way amounts to a valuable material consideration so as to remove political contributions from the purview of a donation. Senator Angara was under no obligation to benefit the petitioners. The proper performance of his duties as a legislator is his obligation as an elected public servant of the Filipino people and not a consideration for the political contributions he received. In fact, as a public servant, he may even be called to enact laws that are contrary to the interests of his benefactors, for the benefit of the greater good. In fine, the purpose for which the sums of money were given, which was to fund the campaign of Senator Angara in his bid for a senatorial seat, cannot be considered as a material consideration so as to negate a donation. Fourth Issue Petitioners raise the fact that since 1939 when the first Tax Code was enacted, up to 1988 the BIR never attempted to subject political contributions to donors tax. They argue that:

. . . It is a familiar principle of law that prolonged practice by the government agency charged with the execution of a statute, acquiesced in and relied upon by all concerned over an appreciable period of time, is an authoritative interpretation thereof, entitled to great weight and the highest respect. . . .12 This Court holds that the BIR is not precluded from making a new interpretation of the law, especially when the old interpretation was flawed. It is a well-entrenched rule that . . . erroneous application and enforcement of the law by public officers do not block subsequent correct application of the statute (PLDT v. Collector of Internal Revenue, 90 Phil. 676), and that the Government is never estopped by mistake or error on the part of its agents (Pineda v. Court of First Instance of Tayabas, 52 Phil. 803, 807; Benguet Consolidated Mining Co. v. Pineda, 98 Phil. 711, 724).13 Seventh Issue Petitioners question the fact that the Court of Appeals decision is based on a BIR ruling, namely BIR Ruling No. 88-344, which was issued after the petitioners were assessed for donors tax. This Court does not need to delve into this issue. It is immaterial whether or not the Court of Appeals based its decision on the BIR ruling because it is not pivotal in deciding this case. As discussed above, Section 91 (now Section 98) of the NIRC as supplemented by the definition of a donation found in Article 725 of the Civil Code, is clear and unambiguous, and needs no further elucidation. Eighth Issue Petitioners next contend that tax laws are construed liberally in favor of the taxpayer and strictly against the government. This rule of construction, however, does not benefit petitioners because, as stated, there is here no room for construction since the law is clear and unambiguous. Finally, this Court takes note of the fact that subsequent to the donations involved in this case, Congress approved Republic Act No. 7166 on November 25, 1991, providing in Section 13 thereof that political/electoral contributions, duly reported to the Commission on Elections, are not subject to the payment of any gift tax. This all the more shows that the political contributions herein made are subject to the payment of gift taxes, since the same were made prior to the exempting legislation, and Republic Act No. 7166 provides no retroactive effect on this point. WHEREFORE, the petition is DENIED and the assailed Decision and Resolution of the Court of Appeals are AFFIRMED. No costs. SO ORDERED.

Article 726 G.R. No. 112796 March 5, 1998 TITO R. LAGAZO, petitioner, vs. COURT OF APPEALS and ALFREDO CABANLIT, respondents.

PANGANIBAN, J.: Where the acceptance of a donation was made in a separate instrument but not formally communicated to the donor, may the donation be nonetheless considered complete, valid and subsisting? Where, the deed of donation did not expressly impose any burden the expressed consideration being purely one of liberality and generosity a separate but the recipient actually paid charges imposed on the property like land taxes and installment arrearages, may the donation be deemed onerous and thus governed by the law on ordinary contracts? The Case The Court answers these questions in the negative as it resolves this petition for review under Rule 45 of the Rules of Court seeking to set aside the Decision 1 of the Court of Appeals 2 in CA-GR CV No. 38050 promulgated on November 29, 1993. The assailed Decision reversed the Regional Trial Court, Branch 30, Manila, in Civil Case No. 8739133 which had disposed 3 of the controversy in favor of herein petitioner in the following manner: 4 WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant as follows: 1. Ordering the defendant, or any person claiming rights under him, to surrender to plaintiff possession of the premises known as Lot 8w, Block 6, Psd-135534 of the Monserrat Estate, and the improvement standing thereon, located at 3320 2nd St., V. Mapa, Old Sta. Mesa, Manila; 2. Ordering the defendant to pay plaintiff the sum of Five Thousand (P5,000.00) Pesos, as and for attorney's fees; and 3. Costs against the defendant. The defendant's counterclaims are hereby dismissed.

The Facts Although the legal conclusions and dispositions of the trial and the appellate courts are conflicting, the factual antecedents of the case are not substantially disputed. 5 We reproduce their narration from the assailed Decision: Civil Case No. 83-39133 involves an action filed by plaintiff-appellee [herein petitioner] on January 22, 1987 seeking to recover from defendantappellant [a] parcel of land which the former claims to have acquired from his grandmother by donation. Defendant-appellant [herein private respondent], on the other hand, put up the defense that when the alleged donation was executed, he had already acquired the property by a Deed of Assignment from a transferee of plaintiff-appellee's grandmother. The evidence for plaintiff-appellee [herein petitioner] is summarized as follows: Catalina Jacob Vda. de Reyes, a widow and grandmother of plaintiffappellee, was awarded in July 1975 a 60.10-square meter lot which is a portion of the Monserrat Estate, more particularly described as Lot 8W, Block 6 of Psd-135834, located at 3320 2nd St., V. Mapa, Old Sta. Mesa, Manila. The Monserrat Estate is a public land owned by the City of Manila and distributed for sale to bona fidetenants under its land-for-the-landless program. Catalina Jacob constructed a house on the lot. On October 3, 1977, or shortly before she left for Canada where she is now a permanent resident, Catalina Jacob executed a special power of attorney (Exh. "A") in favor of her son-in-law Eduardo B. Espaol authorizing him to execute all documents necessary for the final adjudication of her claim as awardee of the lot. Due to the failure of Eduardo B. Espaol to accomplish the purpose of the power of attorney granted to him, Catalina Jacob revoked said authority in an instrument executed in Canada on April 16, 1984 (Exh. "D"). Simultaneous with the revocation, Catalina Jacob executed another power of attorney of the same tenor in favor plaintiff-appellee. On January 30, 1985, Catalina Jacob executed in Canada a Deed of Donation over a Lot 8W in favor of plaintiff-appellee (Exh. "E"). Following the donation, plaintiff-appellee checked with the Register of Deeds and found out that the property was in the delinquent list, so that he paid the installments in arrears and the remaining balance on the lot (Exhs. "F", "F1" and "F-2") and declared the said property in the name of Catalina Jacob (Exhs. "G", "G-1", "G-2" and "G-3").

On January 29, 1986, plaintiff-appellee sent a demand letter to defendantappellant asking him to vacate the premises (Exh. "H"). A similar letter was sent by plaintiff-appellee's counsel to defendant on September 11, 1986 (Exh. "I"). However, defendant-appellant refused to vacate the premises claiming ownership thereof. Hence, plaintiff-appellee instituted the complaint for recovery of possession and damages against defendantappellant. Opposing plaintiff-appellee's version, defendant-appellant claimed that the house and lot in controversy were his by virtue of the following documents: 1. Deed of Absolute Sale executed by Catalina Jacob dated October 7, 1977 in favor of Eduardo B. Espaol covering the residential house located at the premises (Exh. "4"). 2. Deed of Assignment over Lot 8W executed by Catalina Jacob in favor of Eduardo Espaol dated September 30, 1980 (Exh. "5"); and 3. Deed of Assignment executed by Eduardo B. Espaol over Lot 8W and a residential house thereon in favor of defendant-appellant dated October 2, 1982 (Exh. "6"). After trial, the lower court decided in favor of plaintiff-appellee and against defendant-appellant, rationalizing that the version of the former is more credible than that of the latter. According to the lower court: From the oral and documentary evidence adduced by the parties[,] it appears that the plaintiff- has a better right over the property, subject matter of the case. The version of the plaintiff is more credible than that of the defendant. The theory of the plaintiff is that the house and lot belong to him by virtue of the Deed of Donation in his favor executed by his grandmother Mrs. Jacob Vda. de Reyes, the real awardee of the lot in question. The defendant's theory is that he is the owner thereof because he bought the house and lot from Eduardo Espaol, after the latter had shown and given to him Exhibits 1, 4 and 5. He admitted that he signed the Deed of Assignment in favor of Eduardo Espaol on September 30, 1980, but did not see awardee Catalina Jacob Vda. de Reyes signed [sic] it. In fact, the acknowledgement in Exhibit "5" shows that the assignor/awardee did not appear before the notary public. It may be noted that on said date, the original awardee of the lot was no longer in the Philippines, as both parties admitted that she had not come back to the Philippines since 1977. (Exhs. K, K-1). Defendant, claiming to be the owner of the lot, unbelievably did not take any

action to have the said house and lot be registered or had them declared in his own name. Even his Exhibit 7 was not mailed or served to the addressee. Such attitude and laxity is very unnatural for a buyer/owner of a property, in stark contrast of [sic] the interest shown by the plaintiff who saw to it that the lot was removed from the delinquent list for nonpayment of installments and taxes due thereto [sic]. 6 Ruling of the Appellate Court In reversing the trial court's decision, 7 Respondent Court of Appeals anchored its ruling upon the absence of any showing that petitioner accepted his grandmother's donation of the subject land. Citing jurisprudence that the donee's failure to accept a donation whether in the same deed of donation or in a separate instrument renders the donation null and void, Respondent Court denied petitioner's claim of ownership over the disputed land. The appellate court also struck down petitioner's contention that the formalities for a donation of real property should not apply to his case since it was an onerous one he paid for the amortizations due on the land before and after the execution of the deed of donation reasoning that the deed showed no burden, charge or condition imposed upon the donee; thus, the payments made by petitioner were his voluntary acts. Dissatisfied with the foregoing ruling, petitioner now seeks a favorable disposition from this Court. 8 Issues Petitioner anchors his petition on the following grounds: 9 [I.] In reversing the decision of the trial court, the Court of Appeals decided a question of substance in a way not in accord with the law and applicable decisions of this Honorable Court. [II.] Even granting the correctness of the decision of the Court of Appeals, certain fact and circumstances transpired in the meantime which would render said decision manifestly unjust, unfair and inequitable to petitioner. We believe that the resolution of this case hinges on the issue of whether the donation was simple or onerous. The Court's Ruling The petition lacks merit. Main Issue: Simple or Onerous Donation?

At the outset, let us differentiate between a simple donation and an onerous one. A simple or pure donation is one whose cause is pure liberality (no strings attached), while an onerous donation is one which is subject to burdens, charges or future services equal to or more in value than the thing donated. 10 Under Article 733 of the Civil Code, donations with an onerous cause shall be governed by the rules on contracts; hence, the formalities required for a valid simple donation are not applicable. Petitioner contends that the burdens, charges or conditions imposed upon a donation need not be stated on the deed of donation itself. Thus, although the deed did not categorically impose any charge, burden or condition to be satisfied by him, the donation was onerous since he in fact and in reality paid for the installments in arrears and for the remaining balance of the lot in question. Being an onerous donation, his acceptance thereof may be express or implied, as provided under Art. 1320 of the Civil Code, and need not comply with the formalities required by Art. 749 of the same code. His payment of the arrearages and balance and his assertion of his right of possession against private respondent clearly indicate his acceptance of the donation. We rule that the donation was simple, not onerous. Even conceding that petitioner's full payment of the purchase price of the lot might have been a burden to him, such payment was not however imposed by the donor as a condition for the donation. Rather, the deed explicitly stated: That for and in consideration of the love and affection which the DONEE inspires in the DONOR, and as an act of liberality and generosity and considering further that the DONEE is a grandson of the DONOR, the DONOR hereby voluntarily and freely gives, transfer[s] and conveys, by way of donation unto said DONEE, his heirs, executors, administrators and assigns, all the right, title and interest which the said DONOR has in the above described real property, together with all the buildings and improvements found therein, free from all lines [sic] and encumbrances and charges whatsoever; 11 [emphasis supplied] It is clear that the donor did not have any intention to burden or charge petitioner as the donee. The words in the deed are in fact typical of a pure donation. We agree with Respondent Court that the payments made by petitioner were merely his voluntary acts. This much can be gathered from his testimony in court, in which he never even claimed that a burden or charge had been imposed by his grandmother. ATTY FORONDA: q After you have received this [sic] documents, the . . . revocation of power of attorney and the Special Power of Attorney in your favor, what did you do? WITNESS:

a I went here in City Hall and verif[ied] the status of the award of my grandmother. q When you say the award, are you referring to the award in particular [of the] lot in favor of your grandmother? a Yes, Sir. q What was the result of your verification? a According to the person in the office, the papers of my grandmother is [sic] includ[ed] in the dilinquent [sic] list. q What did you do then when you found out that the lot was includ[ed] in the dilinquent [sic] list? a I talked to the person in charged [sic] in the office and I asked him what to do so that the lot should not [be] included in the dilinquent [sic] list. ATTY. FORONDA: q And what was the anwer [sic] given to you to the inquiry which you made? WITNESS: a According to the person in the office, that I would pay the at least [sic] one half of the installment in order to take [out] the document [from] the delinquent list. q And [were] you able to pay? a I was able to pay, sir. q What were you able to pay, one half of the balance or the entire amounts [sic]? a First, I paid the [sic] one half of the balance since the time the lot was awarded to us. q What about the remaining balance, were you able to pay it? a I was able to pay that, sir.

q So, as of now, the amount in the City of Manila of the lot has already been duly paid, is it not? a Yes, sir. 12 The payments even seem to have been made pursuant to the power of attorney 13 executed by Catalina Reyes in favor of petitioner, her grandson, authorizing him to execute acts necessary for the fulfillment of her obligations. Nothing in the records shows that such acts were meant to be a burden in the donation. As a pure or simple donation, the following provisions of the Civil Code are applicable: Art. 734. The donation is perfected from the moment the donor knows of the acceptance by the donee. Art. 746. Acceptance must be made during the lifetime of the donor and the donee. Art. 749. In order that the donation of an immovable may be valid, it must be made in a public instrument, specifying therein the property donated and the value of the charges which the donee must satisfy. The acceptance may be made in the same deed of donation and in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor. If the acceptance is made in a separate instrument, the donor shall be notified thereof in authentic form, and this step shall be noted in both instruments. In the words of the esteemed Mr. Justice Jose C. Vitug, 14 "Like any other contract, an agreement of the parties is essential. The donation, following the theory of cognition (Article 1319, Civil Code), is perfected only upon the moment the donor knows of the acceptance by the donee." Furthermore, "[i]f the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments." 15 Acceptance of the donation by the donee is, therefore, indispensable; its absence makes the donation null and void. 16 The perfection and the validity of a donation are well explained by former Sen. Arturo M. Tolentino in this wise: . . . Title to immovable property does not pass from the donor to the donee by virtue of a deed of donation until and unless it has been accepted in a public instrument and the donor duly notified thereof. The acceptance may be made in the very same instrument of donation. If the acceptance does

not appear in the same document, it must be made in another. Solemn words are not necessary; it is sufficient if it shows the intention to accept. But in this case it is necessary that formal notice thereof be given to the donor, and the fact that due notice has been given must be noted in both instruments (that containing the offer to donate and that showing the acceptance). Then and only then is the donation perfected. If the instrument of donation has been recorded in the registry of property, the instrument that shows the acceptance should also be recorded. Where the deed of donation fails to show the acceptance, or where the formal notice of the acceptance, made in a separate instrument, is either not given to the donor or else not noted in the deed of donation and in the separate acceptance, the donation is null and void. 17 Exhibit E (the deed of donation) does not show any indication that petitioner-donee accepted the gift. During the trial, he did not present any instrument evidencing such acceptance despite the fact that private respondent already raised this allegation in his supplemental pleading 18 to which petitioner raised no objection. It was only after the Court of Appeals had rendered its decision, when petitioner came before this Court, that he submitted an affidavit 19 dated August 28, 1990, manifesting that he "wholeheartedly accepted" the lot given to him by his grandmother, Catalina Reyes. This is too late, because arguments, evidence, causes of action and matters not raised in the trial court may no longer be raised on appeal. 20 True, the acceptance of a donation may be made at any time during the lifetime of the donor. And grantingarguendo that such acceptance may still be admitted in evidence on appeal, there is still need for proof that a formal notice of such acceptance was received by the donor and noted in both the deed of donation and the separate instrument embodying the acceptance. At the very least, this last legal requisite of annotation in both instruments of donation and acceptance was not fulfilled by petitioner. For this reason, the subject lot cannot be adjudicated to him. Secondary Issue: Supervening Events Petitioner also contends that certain supervening events have transpired which render the assailed Decision "manifestly unjust, unfair and inequitable" to him. The City of Manila has granted his request for the transfer to his name of the lot originally awarded in favor of Catalina Reyes. A deed of sale 21 covering the subject lot has in fact been executed between the City of Manila, as the vendor; and petitioner, as the vendee. The corresponding certificate of title 22 has also been issued in petitioner's name. A close perusal of the city government's resolution 23 granting petitioner's request reveals that the request for and the grant of the transfer of the award were premised on the validity and perfection of the deed of donation executed by the original awardee, petitioner's grandmother. This is the same document upon which petitioner, as against

private respondent, asserts his right over the lot. But, as earlier discussed and ruled, this document has no force and effect and, therefore, passes no title, right or interest. Furthermore, the same resolution states: WHEREAS, in a report submitted by Ms. [Menchu C.] Bello [, Special Investigator,] on February 7, 1990, it is stated that . . . constructed on the lot is a make-shift structure used for residential purposes by the proposed transferee Tito Lagazo and his family; . . . and that constructed at Lot 8, Block 6, former Monserrat Estate is a make-shift structure used as a dwelling place by Lagazo and family because the front portion of their house which was constructed on a road lot was demolished, and the structure was extended backward covering a portion of the old temporary road lot. . . . The above findings of the investigator are, however, directly contradictory to the testimonies in court of petitioner himself and of private respondent. Petitioner claimed the following: that the house constructed on the subject lot was owned by his grandmother Catalina Jacob; that before the latter left for Canada in 1977, Eduardo Espaol had already been living in the same house and continued to do so until 1982; and that private respondent occupied the premises after Espaol left. 24 On the other hand, private respondent testified that he bought the subject house and lot from Eduardo Espaol in 1982, after which he and his family occupied the same; but sometime in 1985, they had to leave the place due to a road-widening project which reduced the house to "about three meters [in] length and one arm[']s width." 25 Between the testimonies under oath of the contending parties and the report not subjected to cross-examination which was prepared by the investigator who recommended the approval of petitioner's request for transfer, it is the former to which the Court is inclined to give more credence. The investigator's report must have been based on the misrepresentations of petitioner who arrogated unto himself the prerogatives of both Espaol and private respondent. Further, it is on record that petitioner had required private respondent to vacate the subject premises before he instituted this complaint. This shows he was not in actual possession of the property, contrary to the report of the investigator. Cabanlit's Claim of Ownership Petitioner also assails Respondent Court's conclusion that it is unnecessary to pass upon private respondent's claim over the property. Petitioner insists that the principal issue in the case, as agreed upon by the parties during pretrial, is "who between the parties is the owner of the house and lot in question." In disposing of the principal issue of the right of petitioner over the subject property under the deed of donation, we arrive at one definite conclusion: on the basis of the

alleged donation, petitioner cannot be considered the lawful owner of the subject property. This does not necessarily mean, however, that private respondent is automatically the rightful owner. In resolving private respondent's claim of ownership, the examination of the genuineness of the documents (deeds of assignment over the lot between Catalina Reyes and Eduardo Espaol and between Espaol and private respondent) upon which he asserts his right is necessary, especially in light of petitioner's allegations of forgery. However, the respective assignors in both documents are not parties to the instant case. Not having been impleaded in the trial court, they had no participation whatsoever in the proceedings at bar. Elementary norms of fair play and due process bar us from making any disposition which may affect their rights. Verily, there can be no valid judgment for or against them. 26 Anyhow, since petitioner, who was the plaintiff below, failed to prove with clear and convincing evidence his ownership claim over the subject property, the parties thus resume their status quo ante. The trial court should have dismissed his complaint for his failure to prove a right superior to that of private respondent, but without prejudice to any action that Catalina Reyes or Eduardo Espaol or both may have against said private respondent. Stating this point otherwise, we are not ruling in this case on the rights and obligations between, on the one hand, Catalina Reyes, her assigns and/or representatives; and, on the other, Private Respondent Cabanlit. Not having proven any right to a valid, just and demandable claim that compelled him to litigate or to incur expenses in order to protect his interests by reason of an unjustified act or omission of private respondent, petitioner cannot be awarded attorney's fees. 27 WHEREFORE, the petition is hereby DENIED and the assailed Decision is AFFIRMED. SO ORDERED.

Article 728 G.R. No. 123968 April 24, 2003

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

The present petition for review under Rule 45 of the Rules of Court assails, on a question of law, the February 22, 1996 decision 1 of the Regional Trial Court of San Fernando, La Union, Branch 29, in Civil Case No. 3947, an action for declaration of nullity of a deed of donation. The facts, as culled from the records of the case, are as follows: On April 11, 1958, Celestina Ganuelas Vda. de Valin (Celestina) executed a Deed of Donation of Real Property 2 covering seven parcels of land in favor of her niece Ursulina Ganuelas (Ursulina), one of herein petitioners. The pertinent provision of the deed of donation reads, quoted verbatim: xxx xxx xxx

That, for and in consideration of the love and affection which the DONOR has for the DONEE, and of the faithful services the latter has rendered in the past to the former, the said DONOR does by these presents transfer and convey, by way of DONATION, unto the DONEE the property above, described, to become effective upon the death of the DONOR; but in the event that the DONEE should die before the DONOR, the present donation shall be deemed rescinded and of no further force and effect. xxx xxx xxx.3

On June 10, 1967, Celestina executed a document denominated as Revocation of Donation4 purporting to set aside the deed of donation. More than a month later or on August 18, 1967, Celestina died without issue and any surviving ascendants and siblings. After Celestina's death, Ursulina had been sharing the produce of the donated properties with private respondents Leocadia G. Flores, et al., nieces of Celestina. In 1982, or twenty-four years after the execution of the Deed of Donation, Ursulina secured the corresponding tax declarations, in her name, over the donated properties, to wit: Tax Declarations Nos. 18108, 18109, 18110, 18111, 18112, 18113 and 18114, and since then, she refused to give private respondents any share in the produce of the properties despite repeated demands. Private respondents were thus prompted to file on May 26, 1986 with the RTC of San Fernando, La Union a complaint5 against Ursulina, along with Metodio Ganuelas and Antonio Ganuelas who were alleged to be unwilling plaintiffs. The complaint alleged that the Deed of Donation executed by Celestina in favor of Ursulina was void for lack of acknowledgment by the attesting witnesses thereto before notary public Atty. Henry Valmonte, and the donation was a disposition mortis causa which failed to comply with the provisions of the Civil Code regarding formalities of wills and testaments, hence, it

was void. The plaintiffs-herein private respondents thus prayed that judgment be rendered ordering Ursulina to return to them as intestate heirs the possession and ownership of the properties. They likewise prayed for the cancellation of the tax declarations secured in the name of Ursulina, the partition of the properties among the intestate heirs of Celestina, and the rendering by Ursulina of an accounting of all the fruits of the properties since 1982 and for her to return or pay the value of their shares. The defendants-herein petitioners alleged in their Answer6 that the donation in favor of Ursulina was inter vivos as contemplated under Article 729 of the Civil Code,7 hence, the deed did not have to comply with the requirements for the execution of a valid will; the Revocation of Donation is null and void as the ground mentioned therein is not among those provided by law to be the basis thereof; and at any rate, the revocation could only be legally enforced upon filing of the appropriate complaint in court within the prescriptive period provided by law, which period had, at the time the complaint was filed, already lapsed. By Decision of February 22, 1996, the trial court, holding that the provision in the Deed of Donation that in the event that the DONEE should predecease the DONOR, the "donation shall be deemed rescinded and of no further force and effect" is an explicit indication that the deed is a donation mortis causa,8 found for the plaintiffs-herein private respondents, thus: WHEREFORE the Court renders judgment declaring null and void the Deed of Donation of Real Property executed by Celestina Ganuelas, and orders the partition of the estate of Celestina among the intestate heirs. SO ORDERED.9 The trial court also held that the absence of a reservation clause in the deed implied that Celestina retained complete dominion over her properties, thus supporting the conclusion that the donation is mortis causa,10 and that while the deed contained an attestation clause and an acknowledgment showing the intent of the donor to effect a postmortem disposition, the acknowledgment was defective as only the donor and donee appear to have acknowledged the deed before the notary public, thereby rendering the entire document void.11 Lastly, the trial court held that the subsequent execution by Celestina of the Revocation of Donation showed that the donor intended the revocability of the donation ad nutum, thus sustaining its finding that the conveyance was mortis causa.12 On herein petitioners' argument that the Revocation of Donation was void as the ground mentioned therein is not one of those allowed by law to be a basis for revocation, the trial court held that the legal grounds for such revocation as provided under the Civil Code arise only in cases of donations inter vivos, but not in donationsmortis causa which are revocable at will during the lifetime of the donor. The trial court held, in any event, that given the nullity of the disposition mortis causa in view of a failure to

comply with the formalities required therefor, the Deed of Revocation was a superfluity.13 Hence, the instant petition for review, petitioners contending that the trial court erred: I. . . . WHEN IT DECLARED NULL AND VOID THE DONATION EXECUTED BY CELESTINA GANUELAS; II. . . . WHEN IT UPHELD THE REVOCATION OF DONATION; III. . . . IN RENDERING ITS DECISION ADVERSE TO PETITIONER URSULINA GANUELAS.14 Petitioners argue that the donation contained in the deed is inter vivos as the main consideration for its execution was the donor's affection for the donee rather than the donor's death;15 that the provision on the effectivity of the donation after the donor's death simply meant that absolute ownership would pertain to the donee on the donor's death;16 and that since the donation is inter vivos, it may be revoked only for the reasons provided in Articles 760,17 76418 and 76519 of the Civil Code. In a letter of March 16, 1998,20 private respondent Corazon Sipalay, reacting to this Court's January 28, 1998 Resolution requiring private respondents "to SHOW CAUSE why they should not be disciplinarily dealt with or held in contempt" for failure to submit the name and address of their new counsel, explains that they are no longer interested in pursuing the case and are "willing and ready to waive whatever rights" they have over the properties subject of the donation. Petitioners, who were required to comment on the letter, by Comment of October 28, 1998,21 welcome private respondents' gesture but pray that "for the sake of enriching jurisprudence, their [p]etition be given due course and resolved." The issue is thus whether the donation is inter vivos or mortis causa. Crucial in the resolution of the issue is the determination of whether the donor intended to transfer the ownership over the properties upon the execution of the deed.22 Donation inter vivos differs from donation mortis causa in that in the former, the act is immediately operative even if the actual execution may be deferred until the death of the donor, while in the latter, nothing is conveyed to or acquired by the donee until the death of the donor-testator.23 The following ruling of this Court in Alejandro v. Geraldez is illuminating:24 If the donation is made in contemplation of the donor's death, meaning that the full or naked ownership of the donated properties will pass to the donee only because of the donor's death, then it is at that time that the donation takes effect, and it is a donation mortis causa which should be embodied in a last will and testament.

But if the donation takes effect during the donor's lifetime or independently of the donor's death, meaning that the full or naked ownership (nuda proprietas) of the donated properties passes to the donee during the donor's lifetime, not by reason of his death but because of the deed of donation, then the donation is inter vivos. The distinction between a transfer inter vivos and mortis causa is important as the validity or revocation of the donation depends upon its nature. If the donation is inter vivos, it must be executed and accepted with the formalities prescribed by Articles 74825 and 74926 of the Civil Code, except when it is onerous in which case the rules on contracts will apply. If it is mortis causa, the donation must be in the form of a will, with all the formalities for the validity of wills, otherwise it is void and cannot transfer ownership.27 The distinguishing characteristics of a donation mortis causa are the following: 1. It conveys no title or ownership to the transferee before the death of the transferor; or, what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive; 2. That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed; 3. That the transfer should be void if the transferor should survive the transferee.28 In the donation subject of the present case, there is nothing therein which indicates that any right, title or interest in the donated properties was to be transferred to Ursulina prior to the death of Celestina. The phrase "to become effective upon the death of the DONOR" admits of no other interpretation but that Celestina intended to transfer the ownership of the properties to Ursulina on her death, not during her lifetime.29 More importantly, the provision in the deed stating that if the donee should die before the donor, the donation shall be deemed rescinded and of no further force and effect shows that the donation is a postmortem disposition. As stated in a long line of cases, one of the decisive characteristics of a donation mortis causa is that the transfer should be considered void if the donor should survive the donee.30 More. The deed contains an attestation clause expressly confirming the donation as mortis causa:

SIGNED by the above-named donor, Celestina Ganuelas, at the foot of this deed of donation mortis causa, consisting of two (2) pages and on the left margin of each and every page thereof in the joint presence of all of us who at her request and in her presence and that of each other have in like manner subscribed our names as witnesses.31 (Emphasis supplied) To classify the donation as inter vivos simply because it is founded on considerations of love and affection is erroneous. That the donation was prompted by the affection of the donor for the donee and the services rendered by the latter is of no particular significance in determining whether the deed constitutes a transfer inter vivos or not, because a legacy may have an identical motivation.32 In other words, love and affection may also underline transfers mortis causa.33 In Maglasang v. Heirs of Cabatingan,34 the deeds of donation contained provisions almost identical to those found in the deed subject of the present case: That for and in consideration of the love and affection of the DONOR for the DONEE, x x x. the DONOR does hereby, by these presents, transfer, convey, by way of donation, unto the DONEE the above-described property, together with the buildings and all improvements existing thereon, to become effective upon the death of the DONOR; PROVIDED, HOWEVER, that in the event that the DONEE should die before the DONOR, the present donation shall be deemed automatically rescinded and of no further force and effect. (Emphasis supplied) In that case, this Court held that the donations were mortis causa, for the above-quoted provision conclusively establishes the donor's intention to transfer the ownership and possession of the donated property to the donee only after the former's death. Like in the present case, the deeds therein did not contain any clear provision that purports to pass proprietary rights to the donee prior to the donor's death. As the subject deed then is in the nature of a mortis causa disposition, the formalities of a will under Article 728 of the Civil Code should have been complied with, failing which the donation is void and produces no effect.35 As noted by the trial court, the attesting witnesses failed to acknowledge the deed before the notary public, thus violating Article 806 of the Civil Code which provides: Art. 806. Every will must be acknowledged before a notary public by the testator and the witnesses. The notary public shall not be required to retain a copy of the will, or file another with the office of the Clerk of Court. (Emphasis supplied) The trial court did not thus commit any reversible error in declaring the Deed of Donation to be mortis causa. WHEREFORE, the petition is hereby DENIED for lack of merit.

SO ORDERED.

Article 737 G.R. No. 150179 April 30, 2003

HEIRS OF WILLIAM SEVILLA, NAMELY: WILFREDO SEVILLA, WILSON SEVILLA, WILMA SEVILLA, WILLINGTON SEVILLA, AND WILLIAM SEVILLA, JR., HEIRS OF MARIA SEVILLA, NAMELY: AMADOR SEVILLA, JENO CORTES, VICTOR CORTES, MARICEL CORTES, ALELEI* CORTES AND ANJEI** CORTES,petitioners, vs. LEOPOLDO SEVILLA, PETER SEVILLA, AND LUZVILLA SEVILLA, respondents. YNARES-SANTIAGO, J.: One who alleges defect or lack of valid consent to a contract by reason of fraud or undue influence must establish by full, clear and convincing evidence such specific acts that vitiated a party's consent, otherwise, the latter's presumed consent to the contract prevails.1 The instant petition for review seeks to set aside the September 26, 2000 Decision 2 of the Court of Appeals in CA-G.R. CV No. 48956, affirming in toto the Decision3 of the Regional Trial Court of Dipolog City, Branch 6, in Civil Case No. 4240 which declared, inter alia, the questioned Deed of Donation Inter Vivos valid and binding on the parties. The undisputed facts reveal that on December 10, 1973, Filomena Almirol de Sevilla died intestate leaving 8 children, namely: William, Peter, Leopoldo, Felipe, Rosa, Maria, Luzvilla, and Jimmy, all surnamed Sevilla. William, Jimmy and Maria are now deceased and are survived by their respective spouses and children.4 Filomena Almirol de Sevilla left the following properties: PARCEL I: A parcel of land known as Lot No. 653 situated at General Luna St., Dipolog City, with an area of about 804 square meters, more or less, duly covered by Transfer Certificate of Title No. (T-6671)-1448 [in the name of Filomena Almirol de Sevilla, Honorata Almirol and Felisa Almirol] and assessed at P31,360.00 according to Tax Dec. No. 018-947; PARCEL II: A parcel of land known as Lot No. 3805-B situated at Olingan, Dipolog City, with an area of about 18,934 square meters, more or less, duly covered by Transfer

Certificate of Title No. T-6672 and assessed at P5,890 according to Tax Dec. No. 009-761; PARCEL III: A parcel of land known as Lot No. 837-1/4 situated at Magsaysay Street, Dipolog City, with an area of about 880 square meters more or less, duly covered by Original Certificate of Title No. 0-6064 and assessed at P12,870.00 according to Tax Dec. No. 020-1078; PARCEL IV: A parcel of residential land known as Lot No. 1106-B-3 situated at Sta. Filomena, Dipolog City, with an area of 300 square meters, more or less, assessed at P3,150.00 according to Tax Dec. No. 006-317; Commercial building erected on Parcel I above-described; and residential building erected just at the back of the commercial building above-described and erected on Parcel I above-described;5 Parcel I, Lot No. 653, is the paraphernal property of Filomena Almirol de Sevilla which she co-owned with her sisters, Honorata Almirol and Felisa Almirol,6 who were both single and without issue. Parcels II, III and IV are conjugal properties of Filomena Almirol de Sevilla and her late husband Andres Sevilla.7 When Honorata died in 1982, her 1/3 undivided share in Lot No. 653 was transmitted to her heirs, Felisa Almirol and the heirs of Filomena Almirol de Sevilla, who thereby acquired the property in the proportion of one-half share each. During the lifetime of Felisa and Honorata Almirol, they lived in the house of Filomena Almirol de Sevilla, together with their nephew, respondent Leopoldo Sevilla and his family. Leopoldo attended to the needs of his mother, Filomena, and his two aunts, Honorata and Felisa.8 Felisa died on July 6, 1988.9 Previous thereto, on November 25, 1985, she executed a last will and testament devising her 1/2 share in Lot No. 653 to the spouses Leopoldo Sevilla and Belen Leyson.10 On August 8, 1986, Felisa executed another document denominated as "Donation Inter Vivos" ceding to Leopoldo Sevilla her 1/2 undivided share in Lot No. 653, which was accepted by Leopoldo in the same document. 11 On September 3, 1986, Felisa Almirol and Peter Sevilla, in his own behalf and in behalf of the heirs of Filomena Almirol de Sevilla, executed a Deed of Extra-judicial Partition, identifying and adjudicating the 1/3 share of Honorata Almirol to the heirs of Filomena Almirol de Sevilla and to Felisa Almirol.12 Thereafter, respondents Leopoldo, Peter and Luzvilla Sevilla obtained the cancellation of Transfer Certificate of Title No. (T-6671)-1448, over Lot No. 653, and the issuance of

the corresponding titles to Felisa Almirol and the heirs of Filomena Almirol de Sevilla. However, the requested titles for Lot Nos. 653-A and 653-B, were left unsigned by the Register of Deeds of Dipolog City, pending submission by Peter Sevilla of a Special Power of Attorney authorizing him to represent the other heirs of Filomena Almirol de Sevilla.13 On June 21, 1990, Felipe Sevilla, Rosa Sevilla, and the heirs of William, Jimmy and Maria, all surnamed Sevilla, filed the instant case against respondents Leopoldo Sevilla, Peter Sevilla and Luzvilla Sevilla, for annulment of the Deed of Donation and the Deed of Extrajudicial Partition, Accounting, Damages, with prayer for Receivership and for Partition of the properties of the late Filomena Almirol de Sevilla.14 They alleged that the Deed of Donation is tainted with fraud because Felisa Almirol, who was then 81 years of age, was seriously ill and of unsound mind at the time of the execution thereof; and that the Deed of Extra-judicial Partition is void because it was executed without their knowledge and consent.15 In their answer,16 respondents denied that there was fraud or undue pressure in the execution of the questioned documents. They alleged that Felisa was of sound mind at the time of the execution of the assailed deeds and that she freely and voluntarily ceded her undivided share in Lot No. 653 in consideration of Leopoldo's and his family's love, affection, and services rendered in the past. Respondents further prayed that Parcels II, III, and IV be partitioned among the heirs of Filomena Almirol de Sevilla in accordance with the law on intestate succession. On December 16, 1994, a decision was rendered by the Regional Trial Court of Dipolog City, Zamboanga del Norte, Branch 6, upholding the validity of the Deed of Donation and declaring the Deed of Extra-judicial Partition unenforceable. The dispositive portion thereof, reads: WHEREFORE, IN VIEW OF THE FOREGOING, summing up the evidence for both the plaintiffs and the defendants, the Court hereby renders judgment: 1) Declaring the questioned Deed of Donation Inter Vivos valid and binding, and, therefore, has the full force and effect of law; 2) Declaring the questioned Deed of Extra-Judicial Partition as unenforceable as yet as against the other heirs, as it lacks the legal requisites of Special Power of Attorney or any other appropriate instrument to be executed by the other heirs who were not made parties thereto; 3) Finding the parties herein entitled to the partition of Parcel II, III, IV as designated in the Complaint, in equal shares, and, as to Lot No. 653 designated as Parcel I, it shall be divided equally into two, between defendant Leopoldo Sevilla on one hand, and, collectively, the Heirs of William Sevilla, Heirs of Jimmy Sevilla, Heirs of Maria Sevilla, Felipe Sevilla, Leopoldo Sevilla, Peter Sevilla,

Luzvilla Sevilla-Tan, on the other hand, as well as the two buildings thereon in proportionate values; 4) Directing the parties, if they can agree, to submit herewith a project of partition, which shall designate the share which pertains to the heirs entitled thereto, that is, the particular and specific portions of the properties subject of the partition; 5) Directing defendant Peter Sevilla to pay and/or collect from the parties the amounts corresponding to each one entitled or liable thereto, as recorded in the Statement of Accounts, except for defendant Leopoldo Sevilla who is found by the Court to have incurred only an overdraft of P5,742.98 and not P33,204.33 as earlier computed therein. 6) Dismissing the plaintiffs' claim for damages, which is not proved with sufficient evidence, and defendants' counterclaim, on the same ground. 7) With costs de officio. IT IS SO ORDERED.17 Both parties appealed to the Court of Appeals. Petitioners contended that the Deed of Donation should be declared void and that Lot No. 653 should be divided equally among them. Respondents, on the other hand, posited that the trial court erred in declaring the Deed of Extra-judicial Partition unenforceable against the other heirs of Filomena Almirol de Sevilla who were not parties to said Deed. On September 26, 2000, the Court of Appeals affirmed in toto the assailed decision of the trial court.18 Petitioners filed a motion for reconsideration but the same was denied on August 30, 2001.19 Hence, the instant petition based on the following assignment of errors: THAT THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING AS VOID AB INITIO THE DEED OF DONATION EXECUTED BY FELISA ALMIROL IN FAVOR OF RESPONDENT LEOPOLDO SEVILLA CEDING TO HIM ONE HALF PORTION OF LOT 653, DIPOLOG CADASTRE, IT HAVING BEEN EXECUTED WITH FRAUD, UNDUE PRESSURE AND INFLUENCE; THAT THE APPELLATE COURT GREATLY ERRED IN NOT ORDERING THE PARTITION OF LOT 653, DIPOLOG CADASTRE EQUALLY AMONG THE EIGHT (8) HEIRS OF FILOMENA, HONORATA AND FELISA, ALL SURNAMED ALMIROL.20 To resolve the issue raised in the instant petition for review, the validity of the donation inter vivos executed by Felisa Almirol in favor of Leopoldo Sevilla must first be determined.

Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another who accepts it.21 Under Article 737 of the Civil Code, the donor's capacity shall be determined as of the time of the making of the donation. Like any other contract, an agreement of the parties is essential,22 and the attendance of a vice of consent renders the donation voidable.23 In the case at bar, there is no question that at the time Felisa Almirol executed the deed of donation she was already the owner of 1/2 undivided portion of Lot No. 653. Her 1/3 undivided share therein was increased by 1/2 when she and Filomena inherited the 1/3 share of their sister Honorata after the latter's death. Hence, the 1/2 undivided share of Felisa in Lot No. 653 is considered a present property which she can validly dispose of at the time of the execution of the deed of donation.24 Petitioners, however, insist that respondent Leopoldo Sevilla employed fraud and undue influence on the person of the donor. This argument involves appreciation of the evidence.25 The settled rule is that factual findings of the trial court, if affirmed by the Court of Appeals, are entitled to great respect.26 There are exceptional circumstances when findings of fact of lower courts may be set aside27 but none is present in the case at bar. Indeed, neither fraud nor undue influence can be inferred from the following circumstance alleged by the petitioners, to wit A. That Felisa Almirol lived with respondent Leopoldo Sevilla in the residential house owned by petitioners and respondents; B. That the old woman Felisa Almirol was being supported out of the rentals derived from the building constructed on the land which was a common fund. . . . C. That when Felisa Almirol was already 82 years old, he [Leopoldo Sevilla] accompanied her in the Office of Atty. Vic T. Lacaya, Sr., for the purpose of executing her last will and testament . . . D. That in the last will and testament executed by Felisa Almirol, she had devised in favor of respondent Leopoldo Sevilla one-half of the land in question; E. That respondent Leopoldo Sevilla not contented with the execution by Felisa Almirol of her last will and testament, had consulted a lawyer as to how he will be able to own the land immediately; F. That upon the advice of Atty. Helen Angeles, Clerk of Court of the Regional Trial Court of Zamboanga del Norte, Dipolog City, Felisa Almirol executed a Deed of Donation, hence, the questioned Deed of Donation executed in his favor; G. That the subject matter of the Deed of Donation was the one-half portion of Lot 653, Dipolog Cadastre, which was willed by Felisa Almirol, in favor of respondent Leopoldo Sevilla in her last will and testament;

H. That at the time of the execution of the Deed of Donation, Lot No. 653, Dipolog Cadastre, was not yet partitioned between petitioners and respondents they being heirs of the late Filomena and Honorata, all surnamed Almirol; I. That after the execution of the Deed of Donation, respondent Peter Sevilla and the late Felisa Almirol were the only ones who executed the Deed of Extrajudicial Partition over Lot 653, Dipolog Cadastre, the petitioners were not made parties in the said Deed of Extrajudicial Partition; J. That on the basis of the Deed of Extrajudicial Partition and Deed of Donation, respondent Leopoldo Sevilla caused the subdivision survey of Lot 653, Dipolog Cadastre, dividing the same into two (2) lots, adjudicating one-half of the lot in his favor and the other half in favor of respondents Peter Sevilla and Luzvilla Sevilla, and to respondent Leopoldo Sevilla himself; K. That only two persons knew the actual survey of the land, petitioner Felipe Sevilla and respondent Leopoldo Sevilla himself, the rest of the co-owners were not even notified; L. That on the basis of the Extrajudicial Partition, Deed of Donation, the approved subdivision plan, respondent Leopoldo Sevilla filed a petition for issuance of the corresponding titles for the two lots, but the Register of Deeds of Dipolog City refused to issue the corresponding titles for the two lots to respondent Leopoldo Sevilla so that up to this moment . . . the two titles were left unsigned by the Register of Deeds.28 There is fraud when, through the insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to.29 There is undue influence when a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice. The following circumstances shall be considered: the confidential, family, spiritual and other relations between the parties, or the fact that the person alleged to have been unduly influenced was suffering from mental weakness, or was ignorant or in financial distress.30 Ei incumbit probatio qui dicit, non qui negat. He who asserts, not he who denies, must prove. We have consistently applied the ancient rule that if the plaintiff, upon whom rests the burden of proving his cause of action, fails to show in a satisfactory manner facts on which he bases his claim, the defendant is under no obligation to prove his exception or defense.31 In the instant case, the self-serving testimony of the petitioners are vague on what acts of Leopoldo Sevilla constituted fraud and undue influence and on how these acts vitiated the consent of Felisa Almirol. Fraud and undue influence that vitiated a party's consent must be established by full, clear and convincing evidence, otherwise, the latter's presumed consent to the contract prevails.32 Neither does the fact that the donation preceded the partition constitute fraud. It is not necessary that partition

should first be had because what was donated to Leopoldo was the 1/2 undivided share of Felisa in Lot No. 653. Moreover, petitioners failed to show proof why Felisa should be held incapable of exercising sufficient judgment in ceding her share to respondent Leopoldo.33 As testified by the notary public who notarized the Deed of Donation, Felisa confirmed to him her intention to donate her share in Lot No. 653 to Leopoldo. He stressed that though the donor was old, she was of sound mind and could talk sensibly. Significantly, there is nothing in the record that discloses even an attempt by petitioners to rebut said declaration of the notary public. Clearly, therefore, the courts below did not err in sustaining the validity of the deed of donation. Anent the Deed of Extra-judicial Partition, we find that the same is void ab initio and not merely unenforceable. InDelos Reyes v. Court of Appeals,34 which is a case involving the sale of a lot by a person who is neither the owner nor the legal representative, we declared the contract void ab initio. It was held that one of the requisites of a valid contract under Article 1318 of the Civil Code is the consent and the capacity to give consent of the parties to the contract. The legal capacity of the parties is an essential element for the existence of the contract because it is an indispensable condition for the existence of consent. There is no effective consent in law without the capacity to give such consent. In other words, legal consent presupposes capacity. Thus, there is said to be no consent, and consequently, no contract when the agreement is entered into by one in behalf of another who has never given him authorization therefor unless he has by law a right to represent the latter.35 In the case at bar, at the time Felisa executed the deed of extra-judicial partition dividing the share of her deceased sister Honorata between her and the heirs of Filomena Almirol de Sevilla, she was no longer the owner of the 1/2 undivided portion of Lot No. 653, having previously donated the same to respondent Leopoldo Sevilla who accepted the donation in the same deed. A donation inter vivos, as in the instant case, is immediately operative and final.36 As a mode of acquiring ownership, it 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. Evidently, Felisa did not possess the capacity to give consent to or execute the deed of partition inasmuch as she was neither the owner nor the authorized representative of respondent Leopoldo to whom she previously transmitted ownership of her undivided share in Lot No. 653. Considering that she had no legal capacity to give consent to the deed of partition, it follows that there is no consent given to the execution of the deed, and therefore, there is no contract to speak of. As such, the deed of partition is void ab initio, hence, not susceptible of ratification.

Nevertheless, the nullity of the deed of extra-judicial partition will not affect the validity of the donation inter vivosceding to respondent Leopoldo Sevilla the 1/2 undivided share of Felisa Almirol in Lot No. 653. Said lot should therefore be divided as follows: 1/2 shall go to respondent Leopoldo Sevilla by virtue of the deed of donation, while the other half shall be divided equally among the heirs of Filomena Almirol de Sevilla including Leopoldo Sevilla, following the rules on intestate succession. Finally, we note that the name of Rosa Sevilla, daughter of Filomena Almirol de Sevilla, and one of the plaintiffs herein, was omitted in the dispositive portion of the trial court's decision.37 Her name should therefore be included in the dispositive portion as one of the heirs entitled to share in the properties of the late Filomena Almirol de Sevilla. WHEREFORE, in view of all the foregoing, the Decision of the Court of Appeals in CAG.R. CV No. 48956, affirming in toto the Decision of the Regional Trial Court of Dipolog City, Branch 6, in Civil Case No. 4240, is AFFIRMED with MODIFICATION. The Deed of Extra-judicial Partition dated September 3, 1986 is declared void, and the name of Rosa Sevilla is ordered included in the dispositive portion of the trial court's judgment. SO ORDERED. Article 748 G.R. No. 152317 November 10, 2004

VICTORIA MOREO-LENTFER,* GUNTER LENTFER and JOHN CRAIGIE YOUNG CROSS, petitioners, vs. HANS JURGEN WOLFF, respondent.

DECISION

QUISUMBING, J.: For review on certiorari are the Decision1 dated June 14, 2001, and Resolution2 dated February 22, 2002, of the Court of Appeals in CA-G.R. CV No. 48272. The decision reversed the judgment3 of the Regional Trial Court of Calapan City, Oriental Mindoro, Branch 39, in Civil Case No. R-4219. The facts are as follows:

The petitioners are Gunter Lentfer, a German citizen; his Filipina wife, Victoria MoreoLentfer; and John Craigie Young Cross, an Australian citizen, all residing in Sabang, Puerto Galera, Oriental Mindoro. Respondent Hans Jurgen Wolff is a German citizen, residing in San Lorenzo Village, Makati City. Petitioners alleged that with respondent, on March 6, 1992, they engaged the notarial services of Atty. Rodrigo C. Dimayacyac for: (1) the sale of a beach house owned by petitioner Cross in Sabang, Puerto Galera, Oriental Mindoro, and (2) the assignment of Cross' contract of lease on the land where the house stood. The sale of the beach house and the assignment of the lease right would be in the name of petitioner Victoria Moreo-Lentfer, but the total consideration of 220,000 Deutschmarks (DM) would be paid by respondent Hans Jurgen Wolff. A promissory note was executed by said respondent in favor of petitioner Cross. According to respondent, however, the Lentfer spouses were his confidants who held in trust for him, a time deposit account in the amount of DM 200,000 4 at Solid Bank Corporation. Apprised of his interest to own a house along a beach, the Lentfer couple urged him to buy petitioner Cross' beach house and lease rights in Puerto Galera. Respondent agreed and through a bank-to-bank transaction, he paid Cross the amount of DM 221,7005as total consideration for the sale and assignment of the lease rights. However, Cross, Moreo-Lentfer and Atty. Dimayacyac surreptitiously executed a deed of sale whereby the beach house was made to appear as sold to Moreo-Lentfer for only P100,000.6 The assignment of the lease right was likewise made in favor of Moreo-Lentfer.7 Upon learning of this, respondent filed a Complaint docketed as Civil Case No. R-4219 with the lower court for annulment of sale and reconveyance of property with damages and prayer for a writ of attachment. After trial, the court a quo dismissed the complaint for failure to establish a cause of action, thus: ACCORDINGLY, judgment is hereby rendered in favor of the defendants and against the plaintiff, dismissing the complaint for the reason that plaintiff has not established a cause of action against the defendants with costs against the plaintiff. SO ORDERED.8 Aggrieved, respondent appealed to the Court of Appeals.9 But in its Decision10 dated June 14, 2001, the appellate court reversed the decision of the trial court, thus: WHEREFORE, the judgment appealed from is hereby REVERSED and a new one is hereby rendered, as follows:

1. Defendants-appellees spouses Genter11 and Victoria Moreno-Lentfer and John Craigie Young Cross are jointly and severally held liable to pay plaintiff-appellant the amount of 220,000.00 DM German Currency or its present peso equivalent plus legal interest starting from March 8, 1993, the date of the last final demand letter; 2. The above defendants-appellees are jointly and severally held liable to pay plaintiff-appellant the amount of P200,000.00 Philippine Currency, representing the amount of expenses incurred in the repairs and maintenance of the property plus legal interest starting from October 28, 1992, the date the amount was received by defendant-appellee Victoria Moreno-Lentfer; and 3. The case against defendant-appellee Rodrigo Dimayacyac is dismissed. SO ORDERED.12 Hence, the instant petition raising the following issues: 1) DOES ARTICLE 1238 OF THE NEW CIVIL CODE APPLY IN THE CASE AT BAR?13 2) DOES THE PRINCIPLE OF SOLUTIO INDEBITI UNDER ARTICLE 2154 OF THE NEW CIVIL CODE, THE PRINCIPLE OF JUSTICE AND EQUITY, APPLY IN THE CASE AT BAR?14 Article 1238 of the New Civil Code provides: ART. 1238. Payment made by a third person who does not intend to be reimbursed by the debtor is deemed to be a donation, which requires the debtor's consent. But the payment is in any case valid as to the creditor who has accepted it. Petitioners posit that in a contract of sale, the seller is the creditor, who in this case is Cross, and the buyer is the debtor, namely Moreo-Lentfer in this case. Respondent is the third person who paid the consideration on behalf of Moreo-Lentfer, the debtor. Petitioners insist that respondent did not intend to be reimbursed for said payment and debtor Moreo-Lentfer consented to it. Thus, by virtue of Article 1238, payment by respondent is considered a donation. Respondent counters that Article 1238 bears no relevance to the case since it applies only to contracts of loan where payment is made by a third person to a creditor in favor of a debtor of a previously incurred obligation. The instant case, in contrast, involves a contract of sale where no real creditor-debtor relationship exists between the parties.

Further, respondent argues his conduct never at any time intimated any intention to donate in favor of petitioner Moreo-Lentfer. Moreover, respondent contends that the alleged donation is void for non-compliance with the formal requirements set by law. Citing Article 74815 of the New Civil Code, respondent avers that since the amount involved exceeds P5,000, both the donation and its acceptance must be in writing for the donation to be valid. Respondent further says there was no simultaneous delivery of the money as required by Art. 748 for instances of oral donation. Respondent also calls our attention to the sudden change in petitioners' theory. Previously, before the Court of Appeals, the petitioners claimed that what was donated were the subject properties. But before this Court, they insist that what was actually donated was the money used in the purchase of subject properties. On this point, we find petitioners' stance without merit. Article 1238 of the New Civil Code is not applicable in this case. Trying to apply Art. 1238 to the instant case is like forcing a square peg into a round hole. The absence of intention to be reimbursed, the qualifying circumstance in Art. 1238, is negated by the facts of this case. Respondent's acts contradict any intention to donate the properties to petitioner Moreo-Lentfer. When respondent learned that the sale of the beach house and assignment of the lease right were in favor of Victoria Moreo-Lentfer, he immediately filed a complaint for annulment of the sale and reconveyance of the property with damages and prayer for a writ of attachment. Respondent Moreo-Lentfer at that time claimed the beach house, together with the lease right, was donated to her. Noteworthy, she had changed her theory, to say that it was only the money used in the purchase that was donated to her. But in any event, respondent actually stayed in the beach house in the concept of an owner and shouldered the expenses for its maintenance and repair amounting to P200,000 for the entire period of his stay for ten weeks. Moreover, the appellate court found that respondent is not related or even close to the Lentfer spouses. Obviously, respondent had trusted the Lentfer spouses to keep a time deposit account for him with Solid Bank for the purpose of making the purchase of the cited properties. Petitioner Moreo-Lentfer's claim of either cash or property donation rings hollow. 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.16 But when a large amount of money is involved, equivalent to P3,297,800, based on the exchange rate in the year 1992, we are constrained to take the petitioners' claim of liberality of the donor with more than a grain of salt. Petitioners could not brush aside the fact that a donation must comply with the mandatory formal requirements set forth by law for its validity. Since the subject of donation is the purchase money, Art. 748 of the New Civil Code is applicable. Accordingly, the donation of money equivalent to P3,297,800 as well as its acceptance should have been in writing. It was not. Hence, the donation is invalid for noncompliance with the formal requisites prescribed by law.

Anent the second issue, petitioners insist that since the deed of sale in favor of MoreoLentfer was neither identified or marked nor formally offered in evidence, the same cannot be given any evidentiary value. They add that since it was not annulled, it remains valid and binding. Hence, petitioners argue, the principle of solutio indebiti under Article 215417 of the New Civil Code should be the applicable provision in the resolution of this controversy. If so, the parties unjustly enriched would be liable to the other party who suffered thereby by being correspondingly injured or damaged. The quasi-contract of solutio indebiti harks back to the ancient principle that no one shall enrich himself unjustly at the expense of another.18 It applies where (1) a payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment, and (2) the payment is made through mistake, and not through liberality or some other cause.19 In the instant case, records show that a bank-to-bank payment was made by respondent Wolff to petitioner Cross in favor of co-petitioner Moreo-Lentfer. Respondent was under no duty to make such payment for the benefit of MoreoLentfer. There was no binding relation between respondent and the beneficiary, Moreo-Lentfer. The payment was clearly a mistake. Since Moreo-Lentfer received something when there was no right to demand it, she had an obligation to return it.20 Following Article 2221 of the New Civil Code, two conditions must concur to declare that a person has unjustly enriched himself or herself, namely: (a) a person is unjustly benefited, and (b) such benefit is derived at the expense of or to the damage of another.22 We are convinced petitioner Moreo-Lentfer had been unjustly enriched at the expense of respondent. She acquired the properties through deceit, fraud and abuse of confidence. The principle of justice and equity does not work in her favor but in favor of respondent Wolff. Whatever she may have received by mistake from and at the expense of respondent should thus be returned to the latter, if the demands of justice are to be served. The Court of Appeals held that respondent was not entitled to the reconveyance of the properties because, inter alia, of the express prohibition under the Constitution 23 that non-Filipino citizens cannot acquire land in the Philippines. We note, however, that subject properties consist of a beach house and the lease right over the land where the beach house stands. The constitutional prohibition against aliens from owning land in the Philippines has no actual bearing in this case. A clear distinction exists between the ownership of a piece of land and the mere lease of the land where the foreigner's house stands. Thus, we see no legal reason why reconveyance could not be allowed. Since reconveyance is the proper remedy, respondent's expenses for the maintenance and repair of the beach house is for his own account as owner thereof. It need not be an issue for now.

However, we deem it just and equitable under the circumstances to award respondent nominal damages in the amount of P50,000,24 pursuant to Articles 222125 and 222226 of the New Civil Code, since respondent's property right has been invaded through defraudation and abuse of confidence committed by petitioners. WHEREFORE, the petition is hereby DENIED. The assailed Decision, dated June 14, 2001 and Resolution dated February 22, 2002, of the Court of Appeals in CA-G.R. CV No. 48272 reversing the lower court's judgment are AFFIRMED with MODIFICATION. Petitioners--particularly the spouses Gunter Lentfer and Victoria Moreo-Lentfer--are hereby ORDERED to: 1. RECONVEY to respondent Hans Jurgen Wolff the beach house and the lease right over the land on which it is situated; and 2. PAY respondent Wolff nominal damages in the amount of P50,000.00. Costs against petitioners. SO ORDERED. Article 749 G.R. No. 72908 August 11, 1989 EUFEMIA PAJARILLO, CLAUDIO SUTERIO, JR., NYMIA SUTERIO and MARILYN SUTERIO, petitioners, vs. INTERMEDIATE APPELLATE COURT, THIRD CIVIL CASES DIVISION, SALUD SUTERIO and PEDRO MATIAS,respondents. Agustin A. Ferrer for petitioners. Alfredo I. Raya for respondents.

CRUZ, J.: This is one of those distasteful litigations involving a controversy among close relatives over properties left by a common ascendant. The petitioners are the widow and children of the brother of the principal private respondent. She and her brother appear to be the only remaining issue of the mother who seems to have caused all the present confusion. The record does not show how close, if at all, the members of this small family were. What is certain is that there is no affection now among the protagonists in this case.

The mother was Juana Balane de Suterio, who had a brother named Felipe Balane and a sister named Perfecta Balane de Cordero. Perfecta died in 1945 leaving inter alia a tract of land consisting of about 28 hectares and covered by TCT No. 4671 in the Registry of Deeds of Quezon Province. On May 20, 1946, Juana and Felipe executed a public instrument entitled "Extra-judicial Settlement of the Estate of the Deceased Perfecta Balane de Cordero." 1 In it they disposed of the said property as follows: EXTRA-JUDICIAL SETTLEMENT OF THE ESTATE OF DECEASED PERFECTA BALANE DE CORDERO. This agreement made to 20th day of May, 1946, by and between Felipe Balane and Juana Balane de Suterio, both of age and residents of Macalelon, Tayabas, Philippines. WITNESSETH: That whereas, the said Felipe Balane and Juana Balane de Suterio are the only brother and sister respectively and forced heirs of Perfecta Balane de Cordero who dies intestate on January 21, 1945; That whereas, the said Perfects Balane de Cordero, deceased, left property described as follows: TRANSFER CERTIFICATE OF TITLE NO. 4671. Province of Tayabas. A parcel of land (Lot No. 6-A, Plan Psu-12210), with an buildings and improvements except those herein expressly noted as belonging to other person, situated in the barrio of Luctol, Municipality of Macalelon. Bounded on the NE., by Lot No. 6-B; on the E., by property by Andrea Fernandez, the sapa Luctob and the sapa Patay; on the SE., by properties of Andrea Fernandez and Silvestra Mereis on the SW., by properties of Felix Rodriguez, Dionisio Fornea Placido Abistado and Adriano Abistado and the mangrove of the government; and on the NW., by properties of Orilleneda Mariano, Glindro Maxima Orilleneda Placida Forcados and Basilio Rabe .. .. .. .. .. .. .. containing an area of TWO HUNDRED EIGHTY FIVE THOUSAND THREE HUNDRED FIFTY-THREE SQUARE METERS (285,353) more or less. That whereas, we Felipe Balane and Juana Balane de Suterio, the only heirs of the property described above left by the deceased Perfecta Balane de Cordero, do hereby agree in carrying out the antemortem wish of our beloved deceased sister that in consideration of love and affection the property described above be donated to Salud Sutexio de Matias.

That whereas, the estate left by the said Perfecta Balane de Castro, deceased, is not free from obligation or debt. It has an incumbrance of about ONE THOUSAND PESOS (P1,000.00) to the Philippine National Bank, Tayabas Branch. That whereas, Salud Suterio de Matias, to whom this property is donated extra-judicially as agreed upon by both heirs, shall assume the said obligation to the Philippine National Bank, Tayabas Branch. NOW, THEREFORE, we Felipe Balane and Juana Balane de Suterio have mutually agreed and covenanted to adjudicate, give, transfer and convey the property described above to Salud Suterio de Matias heirs, executors, administrators and assign. And the donee does hereby accept this donation and does hereby express her gratitutde for the kindness and liberality of the donor. IN WITNESS WHEREOF, we have hereunto set our hands tills 20th day of May, 1946. (Sgd.) FELIPE BALANE FELIPE BALANE (Sgd.) JUANA BALANE DE SUTERIO JUANA BALANE DE SUTERIO (Acknowledgment) On June 20, 1946, Salud Suterio executed the following public instrument, 2 petitioner Eufemia Pajarillo was one of the witnesses: KNOW ALL MEN BY THESE PRESENTS: That on May 20, 1946, FELIPE BALANE and JUANA BALANE DE SUTERIO, the only heirs to the properties of the late PERFECTA BALANE DE CORDERO, executed a DEED OF DONATION in favor of the undersigned and the said donation was made, in accordance to the antemortem wish of my late aunt, Perfecta Balane de Cordero, to the effect that the property described in the Deed of Donation, be given to me because of her love and affection for me, being her only niece. That, I, SALUD SUTERIO, DE MATIAS, the only DONEE, do hereby receive and accept this donation and further express my gratitude for the kindness and liberality of the DONORS, FELIPE BALANE and JUANA BALANE DE SUTERIO.

IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of June, 1946. (Sgd.) SALUD SUTERIO DE MATIAS SUTE RIO DE MATI AS D o n e e Signed in the presence of (Sgd.) SOFRONIO BALANE (Sgd.) EUFEMIA P. SUTERIO (Acknowledgment) These instruments were never registered nor was title transferred in Salud's name although she says she immediately took possession of the land. Meantime, intestate proceedings were instituted on the estate of Perfecta and the said land was among those included in the inventory of the properties belonging to the decedent. 3 Salud interposed no objection to its inclusion nor did she oppose its subsequent adjudication to her mother Juana in the project of partition. It is not clear if the land was ever registered in Juana's name. However, there is evidence that Juana confirmed the earlier donation of the land to Salud but requested that she be allowed to possess the same and enjoy its fruits, until her death. 4 It has also not been controverted that Salud paid the P1,000.00 loan for which the land was mortgaged. Salud says that sometime in 1951, acceding to this request, she transferred the possession of the land to her mother, who was then staying with Claudio and his family. During the period they were occupying the land, Claudio paid the realty taxes thereon . 5 On May 25, 1956, Juana executed a deed of absolute sale conveying the land to Claudio for the declared consideration of P12,000.00. 6 Two years later, on August 27, 1958, Claudio had the land registered in as name and was issued TCT No. 32050 in the land records of Quezon Province. 7

Claudio died in 1961 and his mother in 1963. On June 30, 1965, the private respondents filed a complaint for the reconveyance of the property on the ground that the deed of sale in favor of Claudio was fictitious and its registration in his name was null and void . 8 Salud (joined by her husband) alleged that she was unaware until later of the supposed sale of the land to Claudio. She faulted it as having been procured through fraud and improper influence on her sick and aged mother. She claimed that no compensation was actually paid by Claudio and that the transaction was deliberately concealed from her by her brother and the defendants. 9 For their part, the defendants assailed the donation to Salud as legally inefficacious and defective and contended that her complaint was barred by prescription, estoppel and res judicata. They also filed a counterclaim questioning the sale to Salud by her mother of another tract of land, in which they said they were entitled to share as Juana's heirs. 10 On April 17,1979, Judge Juan M. Montecillo of the Court of First Instance of Quezon rendered judgment upholding the donation to the plaintiff and annulling the deed of sale and the registration of the land in favor of Claudio Suterio, Sr. The defendants were required to reconvey the land to Salud Suterio even as their counterclaim was dismissed for lack of evidence. 11 On appeal, the decision was affirmed in toto. 12 The respondent court is now sought to be reversed in this petition for certiorari under Rule 45 of the Rules of Court. We hold at the outset that, contrary to the ruling in the challenged decision, the petitioners have the legal personality to challenge the validity of the donation on which Salud bases her claim to the property under litigation. As defendants in the complaint for reconveyance, they had every right to resist the plaintiffs' allegation that she was the owner of the subject property by virtue of the claimed donation. Recognition of that donation would topple the props of their own contention that Juana could dispose of the property as its owner when she sold it to Claudio Suterio in 1956. The petitioners also assail the intrinsic validity of the extrajudical settlement and submit that it is not really a donation as conceptually understood in civil law. Their argument is that the real donor of the property was Perfecta, the deceased sister, who, however, could no longer bestow the intended gift. For their part, Felipe and Juana could not have made, the donation either because they were not moved by the same sentiments Perfects had for her niece Salud. That feeling would have provided the required consideration if Perfects herself had made the donation, but not the other two. This appears to be too much nitpicking, if not sophistry. Felipe and Juana had declared themselves the heirs of Perfecta and the owners of the property in question. As such, they were free to give the land to whomever they pleased and for whatever reason they saw fit. Hence, if they chose to respect Perfecta's wishes and carry out her intentions by donating the land to Salud, there was no legal impediment to their doing so. In fact, that was not only the legal but also the moral thing to do.

There is no question that Felipe and Juana could have simply disregarded their sister's sentiments and decided not to donate the property to Salud, keeping the same for themselves. The fact that they did not do this speaks well indeed of their integrity and their loyalty as well to their deceased sister. The extrajudicial settlement also reflects their own affection for Salud which constituted the valid consideration for their own act of liberality. Notably, in her acceptance of the donation, Salud referred to 'the donors Felipe Balane and Juana Balane de Suterio," and not Perfecta. It is also pointed out that the donation is defective in form because of non-compliance with the requirements of the law regarding its acceptance. As it was executed in 1946, the applicable rule is Article 633 of the old Civil Code reading as follows: Art. 633. In order that a donation of real property be valid it must be made by public instrument in which the property donated must be specifically described and the amount of the charges to be assumed by the donee expressed. The acceptance may be made, in the deed of gift or in a separate public writing; but it shall produce no effect if not made during the lifetime of the donor. If the acceptance is made, by separate public instrument, authentic notice thereof shall be given the donor, and this proceeding shall be noted in both instruments. 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 than the annulment of the donation for being defective in form as urged by the petitioners. This would be in keeping with the unmistakable language of the above-quoted provision. However, we find that under the circumstances of the present case, a literal adherence to the requirement of the law might result not in justice to the parties but conversely a distortion of their intentions. It is also a policy of the Court to avoid such an intepretation.

The purpose of the formal requirement is to insure that the acceptance of the donation is duly communicated to the donor. In the case at bar, it is not even suggested that Juana was unaware of the acceptance for she in fact confirmed it later and requested that the donated land be not registered during her lifetime by Salud. 13 Given this significant evidence, the Court cannot in conscience declare the donation ineffective because there is no notation in the extrajudicial settlement of the donee's acceptance. That would be placing too much stress on mere form over substance. It would also disregard the clear reality of the acceptance of the donation as manifested in the separate instrument dated June 20,1946, and as later acknowledged by Juana. The cases cited by the parties in their respective memoranda are not really in point. In Legasto v. Verzosa, 14there was no evidence whatsoever that the claimed donations had been accepted, as stressed by Justice Villa-Real. The same observation is made of Santos v. Robledo, 15 where Justice Torres noted that the acceptance of the donation did not appear in the deed of donation or in any other instrument. The petitioners would also fault the private respondents for laches and argue that Salud's inaction in protection of her rights should bar her from asserting them at this late hour. Specifically, it is pointed out that she failed to register the deed of donation and its acceptance in 1946; did not oppose the inclusion of the subject land in the inventory of Perfecta's properties submitted in the intestate proceedings in 1946; did not object to the adjudication of the land to Juana in the project of partition in 1951; did not protest the sale of the land to Claudio Suterio in 1956; and did not question its registration in his name in 1958. It is contended that all these acts constitute laches, which has been described by this Court thus: An estoppel by laches arises from the negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. 16 The problem with the petitioners' theory is that it would regard Juana and Salud as strangers when they are in fact mother and daughter. One may expect a person to be vigilant of his rights when dealing with an acquaintance or associate, or even with a friend, but not when the other person is a close relative, as in the case at bar. To begin with, the land came from Juana herself. Secondly, she requested her daughter not to register the land as long as she was still alive so she could enjoy its fruits until her death. To Salud, it was not difficult to comply with this request, coming as it did from her own mother. There was no reason to disobey her. She did not have to protect herself against her own mother. Indeed, what would have been unseemly was her registering the land against her mother's request as if she had no confidence in her. Salud did no less than what any dutiful daughter would have done under the circumstances. If Salud did not protest the inclusion of the land in the inventory of Perfecta's properties and its subsequent adjudication to Juana in the intestate proceedings, it was because she did not feel threatened by these acts. She did not distrust her mother. Moreover, Juana had herself acknowledged the donation when she was asked in whose name the

property would be registered following the intestate proceedings. Salud felt safe because she had the extrajudicial settlement to rely on to prove that her mother and her uncle had donated the subject land to her. There is nothing in this instrument to suggest that the donation was to take effect upon the death of the donors as to make it a donation mortis causa, as urged by the petitioners. The donation became effective upon acceptance by Salud except that, in obedience to her mother's request, she chose not to register the land in the meantime and to allow her mother to enjoy its fruits. What was deferred was not its effectivity but only its enjoyment by Salud. Registration was not necessary to make the donation a binding commitment insofar as the donors and the donee were concerned. 17 As for her inaction against the deed of sale in favor of her brother Claudio, it should be noted in the first place that she was not aware of it when it was executed in 1956. Her mother, who was already 76 years old at the time, never informed her about it, nor did her brother or any of the defendants, for reasons of their own. It was only later, when the sale was registered in 1958 and a new title to the land was issued to Claudio, that she started asking questions. Even then, being a sister to Claudio, she did not immediatey take legal steps. It is natural, even among non-relatives, to seek a non-judicial settlement through extralegal measures before going to court. It is more so in the case of relatives, who should avoid as much as possible the asperity and bitterness of litigation. That is what Salud did when she repeatedly asked the petitioners for the return of the property albeit to no avail. It was only when it became clear that amicable persuasion was not possible that she decided to sue the wife and children of her departed brother. The petitioners stress that it took Salud all of seven years from the registration of the land in Claudios's name before she filed the complaint for reconveyance against them. That is true. But if one remembers that her brother died only in 1961 and her own mother only in 1963, at the age of 83, it will be easy to understand the reason for the delay, which would otherwise have been unjustified. Suits among brothers and sisters are especially painful to their parents. Salud must have thought many times about filing her complaint against her brother Claudio while her old mother was still alive. In fact, Salud hesitated still even after her mother's death and took two more years before she finally filed her complaint against Claudio's wife and children. It is clear that Juana Balane de Suterio had no right to sell the subject land to Claudio because she was no longer its owner, having previously donated it to her daughter Salud. Juana herself was holding the land merely as a trustee of Salud, who had transferred possession to her mother at the old woman's request. The deed of sale was itself vitiated by bad faith as Claudio is presumed to have known of the previous donation to his sister Salud, whose acceptance of the donation was formally witnessed by hiw own wife, the herein principal petitioner. 18 When Claudio registered the land in his name knowing there was a flaw in his title, an implied trust was created in favor of

Salud as the real owner of the property in accordance with Article 1456 of the Civil Code, reading as follows: If the property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. As trustor, Salud had every right to sue for the recovery of the land in the action for reconveyance against Claudio's heirs. As we said in Vda. de Jacinto, et al. v. Vda. de Jacinto, et al. ... 19 Public policy demands that a person guilty of fraud or at least, of breach of trust, should not be allowed to use a Torrens title as a shield against the consequences of his own wrongdoing. The petitioners do not insist on prescription as a bar to the action for reconveyance, and understandably so. The legal principle is that if the registration of the land is fraudulent and the person in whose name the land is registered thus holds it as a mere trustee, the real owner is entitled to file an action for reconveyance of the property within a period of ten years. As we have held in many cases: Where the action is one for reconveyance based on constructive trust, a ten-year period is allowed. 20 An action for reconveyance of realty, based upon a constructive or implied trust resulting from fraud, may be barred by prescription. The prescriptive period is reckoned from the issuance of the title which operates as a constructive notice. 21 While actions to enforce a constructive trust prescribe in 10 years from registration of the property, private respondents' right commenced from actual discovery of petitioner's act of defraudation. 22 The record shows that while the land was registered in the name of Claudio Suterio, Sr. in 1958, the complaint for reconveyance was filed by the petitioners in 1965, or still within the ten-year prescriptive period. The last issue raised by the petitioners, viz., the validity of the deed of sale executed by Juana Balane de Suterio on January 29,1950, in favor of Salud Suterio, 23 need not detain us too long. The trial court sustained the contract for lack of sufficient evidence to invalidate it and was upheld by the respondent court. We see no reason to disturb their factual finding, absent a showing that it was reached arbitrarily. Interestingly, it occurred to the petitioners to question the transaction only when they were sued by the private respondents, after ten years from the date of the sale. This is an even longer period than the nine years during which the petitioners say Salud Suterio was sleeping on her rights following the sale of her land to Claudio Suterio.

WHEREFORE, the petition is DENIED, with costs against the petitioners. It is so ordered. Narvasa, Gancayco, Gri;o-Aquino and Medialdea, JJ., concur. G.R. No. 149570 March 12, 2004

HEIRS OF ROSENDO SEVILLA FLORENCIO, as represented by ESTRELLITA FLORENCIO-CRUZ and RODRIGO R. FLORENCIO, petitioners, vs. HEIRS OF TERESA SEVILLA DE LEON as represented by VALERIANA MORENTE, respondents. DECISION CALLEJO, SR., J.: Before us is a petition for review of the Joint Decision1 of the Court of Appeals in CAG.R. SP Nos. 59698-99 which affirmed the June 5, 2000 Decisions2 of the Regional Trial Court of Malolos, Bulacan, Branch 20 in Civil Cases No. 1018-M-99 and 1019-M99, and the resolution of the appellate court denying the petitioners mot ion for reconsideration. The Antecedents Teresa Sevilla de Leon, owned a residential lot with an area of 828 square meters located in San Miguel, Bulacan. The said lot was covered by Transfer Certificate of Title (TCT) No. T-44349.3 In the 1960s, De Leon allowed the spouses Rosendo and Consuelo Florencio to construct a house on the said property and stay therein without any rentals therefor. On September 26, 1966, De Leon, with the consent of her husband Luis, leased the aforesaid parcel of land forP5 per month to Bienvenido Santos "for as long as the lessor (Teresa de Leon) had an outstanding loan with the Second Quezon City Development Bank of Quezon City but not to exceed the period of fifteen (15) years." 4 De Leon assigned her leasehold right in favor of the Second Quezon City Development Bank. The lease and De Leons leasehold right were annotated at the back of TCT No. T 44349 as Entry Nos. 152248 and 152249,5respectively. Thereafter, Bienvenido Santos constructed a house thereon. In November 1978, De Leon, then already a widow, died intestate. In deference to her wishes, her heirs allowed Rosendo Florencio to continue staying in the property. In March 1995, Florencio died intestate, but his heirs, the respondents, remained in the property. On April 26, 1995, the heirs of De Leon, through counsel, sent a letter to the heirs of Florencio, demanding that they vacate the property within ninety (90) days from receipt thereof.6 The latter refused and failed to vacate the property.

The heirs of De Leon, through Valeriana L. Morente, thereafter filed a complaint for ejectment against the heirs of Florencio before the Municipal Trial Court of San Miguel, Bulacan, docketed as Civil Case No. 2061. Therein, the plaintiffs alleged that they were the pro-indiviso owners of the 828 square-meter lot covered by TCT No. T-44349, which they inherited from their mother. During her lifetime, their mother allowed Florencio and his family to occupy the property without any compensation, subject to the condition that they shall vacate the same upon demand; such arrangement went on even after their mothers demise. They further averred that sometime in 1995, they demanded that the heirs of Florencio vacate the property, but that the latter refused to do so. 7 The plaintiff thence prayed: WHEREFORE, premises considered, it is most respectfully prayed that after due hearing, judgment be rendered ordering defendants to: 1. Vacate the premises which they are presently occupying; 2. Pay plaintiff the amount of P100,000.00 as and by way of attorneys fees; 3. Pay plaintiff P100,000.00 as moral damages; 4. Pay plaintiff P100,000.00 as exemplary damages. 5. Pay plaintiff P10,000.00 per month from April 26, 1995 up to and until defendants vacate the premises. Plaintiff prays for other reliefs just and equitable under the circumstances.8 In their answer to the complaint, the heirs of Florencio alleged that the plaintiffs had no cause of action against them, as Teresa de Leon had executed a Deed of Donation on October 1, 1976 over the said parcel of land in favor of their predecessor, Rosendo Florencio. The latter accepted the donation, as shown by his signature above his typewritten name on page one of the deed. The execution of the deed was witnessed by Patria L. Manotoc and Valeriana L. Morente. Atty. Tirso L. Manguiat, a notary public in the City of Manila, notarized the deed on said date and entered it in his notarial record as Doc. No. 1724, page 71, Book IV, series of 1976.9 The heirs of Florencio further averred that since then, their predecessor and his family possessed the aforesaid property as owners. After De Leons death, Florencio and his children, in coordination with Jose de Leon, the administrator of the aforesaid property, arranged for the registration of the land subject of the donation in the name of Rosendo Florencio, which was, however, superseded by the untimely demise of Jose de Leon in 1991. Thus, the property remained in the name of Teresa Sevilla de Leon, even after Florencios death in March of 1995.10

On February 1, 1996, the heirs of De Leon, represented by Valeriana L. Morente, also filed a complaint for ejectment against the heirs of Bienvenido Santos before the MTC of San Miguel, Bulacan, docketed as Civil Case No. 2062.11 They prayed, thus: WHEREFORE, premises considered, it is most respectfully prayed that after due hearing, judgment be rendered ordering defendants to: 1. Vacate the premises which they are presently occupying; 2. Pay plaintiff the amount of P100,000.00 as and by way of attorneys fees; 3. Pay plaintiff P100,000.00 as moral damages; 4. Pay plaintiff P100,000.00 as exemplary damages; 5. Pay plaintiff P10,000.00 per month from April 26, 1995 up to and until defendants vacate the premises. Plaintiff prays for other reliefs just and equitable under the circumstances.12 In their answer to the complaint, the heirs of Bienvenido Santos, through counsel, alleged that the plaintiffs had no cause of action against them, and that they did not occupy the property by mere tolerance but on the basis of a contract of lease executed by De Leon on September 26, 1966. Furthermore, De Leon donated the property to Rosendo Florencio on October 1, 1976, and the latter, after the expiration of the contract of lease, allowed and permitted them to continue and remain in possession of the property without any compensation. According to the heirs of Bienvenido Santos, only Florencios heirs had the right to cause their eviction from the property by reason of the deed of donation executed in favor of the latter. The trial of the two cases was consolidated. The parties agreed to litigate the following issues: After the preliminary conference, parties submitted their respective position papers. Plaintiffs raised and argued on the following issues: a). Defendants possession of the premises was merely on the tolerance of the late Teresa de Leon. b). The alleged Deed of Donation does not exist, is patently a falsified document and can never be the source of any right whatsoever. Defendants, on the other hand, raised and argued on the following issues:

a). Defendants do not have only a better right of possession over the questioned parcel of land and they do not have only the absolute and lawful possession of the same but they have the absolute and lawful ownership of the same not only against the plaintiffs but against the whole world. b). Defendants are entitled to their counterclaim.13 On motion of the plaintiffs in both cases, the court issued an Order directing the heirs of Florencio to produce the original of the Deed of Donation purportedly executed by Teresa de Leon. However, they failed to comply with the order of the court and submitted a mere photocopy of the same.14 The plaintiffs adduced in evidence the following: (1) TCT No. T-44349 in the name of Teresa Sevilla;15 (2) demand letters sent by the plaintiffs counsel to the defendants demanding that the latter vacate the subject premises;16 (3) affidavit-complaint of Valeriana Morente filed in the Office of the Provincial Prosecutor of Bulacan docketed as I.S. No. 96-1513 for falsification, perjury and applicable crimes against Rodrigo Florencio and Atty. Tirso Manguiat, dated May 8, 1996;17 (4) affidavit-complaint executed by Ramon de Leon Manotoc dated May 8, 1996;18 (5) copies of Teresa de Leons passport issued on April 28, 1975 containing specimens of her signature;19 (6) copy of Patria Manotocs passport issued on September 16, 1997 with her specimen signature therein;20 (7) copy of Valeriana Morentes passports issued on the following dates: (a) February 20, 1967;21 (b) April 28, 1975;22 (c) October 4, 1984;23 and (d) August 22, 1994,24 with specimens of her signature appearing therein covering a span of thirty years; (8) copy of the Certificate of Death of Patria Manotoc;25 (9) Certification dated April 23, 1996 issued by Teresita R. Ignacio, Chief, Archives Division of the Records Management and Archives Division of Manila26 to the effect that nothing in the notarial register of Atty. Tirso L. Manguiat show that he notarized a deed of donation dated October 1, 1976 in favor of Rosendo Florencio; (10) copy of Sinumpaang Salaysay dated July 19, 1996 executed by one Rodolfo Apolinario; 27 and, (11) copies of the official receipts of the real estate taxes paid.28 For their part, the heirs of Florencio adduced in evidence a photocopy of the Deed of Donation dated October 1, 1976 purportedly executed by De Leon in favor of Rosendo Florencio.29 The heirs of Bienvenido Santos submitted in evidence as Exhibits "1" and "1-H" the Contract of Lease dated September 6, 1966 between Teresa Sevilla and Bienvenido R. Santos.30 On December 3, 1996, the MTC rendered a decision in Civil Cases Nos. 2061 and 2062 dismissing the complaints for lack of jurisdiction upon the finding that the issue of possession cannot be determined without resolving, in a full blown trial, the issue of ownership.31

The heirs of De Leon appealed the decisions of the MTC to the RTC of Bulacan, Branch 83, which rendered judgment reversing the decision of the court a quo. It held that the MTC had jurisdiction over the cases; as such, the trial court should proceed and render judgment therefor. In the course of the proceedings, the defendants adduced in evidence a copy of the Deed of Donation as certified by the RTC of Bulacan on May 29, 1996.32 On August 27, 1999, the MTC rendered an Amended Decision in Civil Case No. 2061 in favor of the defendants and against the plaintiffs. The dispositive portion of the decision reads: WHEREFORE, the court finds the defendants as having a better right of possession over the subject parcel of land as against the plaintiffs and hereby orders this case DISMISSED. For lack of evidence to prove bad faith on the part of the plaintiffs in the filing of this case, and in line with the policy not to put premium on the right to litigate, the counterclaim of the defendants is, likewise, ordered DISMISSED. With no pronouncements as to costs. SO ORDERED.33 The decision was appealed to the RTC of Bulacan. On June 5, 2000, the RTC rendered judgment reversing the decision of the MTC and rendered a new judgment in favor of the plaintiffs, as follows: WHEREFORE, premises considered, the Decision dated August 27, 1999, rendered by the Municipal Trial Court of San Miguel, Bulacan, in Civil Case No. 2061, is hereby set aside and a new one is hereby rendered, as follows: a) Ordering the heirs of Rosendo Florencio and all those claiming any rights under them to vacate the subject premises, particularly that parcel of land covered by Transfer Certificate of Title (TCT) No. T-44349, situated in San Jose, San Miguel, Bulacan; b) Ordering the Heirs of Rosendo Florencio to pay the heirs of Teresa Sevilla the amount of P2,000.00 per month as reasonable monthly rental on the premises, to commence on April 1995 until the premises is vacated by them; and c) Ordering the heirs of Rosendo Florencio to pay the heirs of Teresa Sevilla the amount of P10,000.00, as attorneys fees and expenses of litigation. SO ORDERED.34

The RTC ruled that the deed of donation was insufficient to support the claim of the heirs of Florencio that they were the owners of the property and were, thus, entitled to its possession. The defendants, now the petitioners, filed a petition for review with the Court of Appeals of the decision of the RTC. On May 28, 2001, the Court of Appeals rendered judgment dismissing the petition and affirming the RTC decision. The CA adopted the findings of the RTC and its disquisitions on why the deed of donation was not a credible piece of evidence to support the petitioners claim over the property; hence, did not transfe r title over the property in favor of the petitioners. First. The deed of donation (Exh. "1"), which purports to have been executed in 1976, is not annotated on the title to the property which remains registered in the name of Teresa Sevilla under TCT No. T-44349 (Exh. "A" and "A-1"). There is no showing whatsoever that the same or a copy thereof was submitted to the Office of the Register of Deeds. Second. As earlier pointed out, throughout the years, the real estate taxes on the property continued to be paid in the name of Teresa Sevilla by the caretaker Rodolfo Apolinario and nobody else. There is no showing that the defendants had previously laid any claim of title or ownership over the property and attempted to pay the taxes thereon. Third. Although it purports to have been notarized in the City of Manila by one Atty. Tirso L. Manguiat, there is no indication of its existence in the notarial record of Atty. Manguiat, as per Certification dated April 23, 1996 (Exh. "L") of the Manila Records Management and Archives Office. One can only wonder why from the place of execution in San Miguel, Bulacan on October 1, 1976, its notarization on the same date had to be in the City of Manila. Fourth. The Court has noted, as anyone can easily do, that the signature purported to be that of Teresa de Leon appearing in the deed of donation (Exh. "1-B"), is dissimilar to her customary signatures affixed to her passports (Exhs. "E" and "E-1"). The same is true with those of Patria Manotoc and Valeriana L. Morente appearing in the same deed of donation (Exhs. "1-D and "1-E"), with those of their customary signatures appearing in their respective passports (Exhs. "F" and "F-1"; "G," "G-1" and "G-2"; "H," "H-1" and "H-2"; "I" and "I-1" and "J" and "J-1"). And Fifth. There is no explanation given why since 1976, when the deed of donation was supposedly executed, up to the present, the defendants did not register the same to secure a new title in their names. In fact, there is no showing that efforts toward that end were ever executed. As it is, the Court holds that the deed of donation in question is not a credible piece of evidence to support the defendants claim of acquisition of title and ownership over the subject property and therefore insufficient to justify their continuing possession and occupancy thereof. Thus, as against defendants claim which is unregistered, the

plaintiffs right over the property as the legal heirs and successors-in-interest of the registered owner must prevail.35 The Present Petition The petitioners now contend in this case that the Court of Appeals and the RTC erred in rendering judgment for the respondents, thus: 1. In finding no reversible error committed by the Regional Trial Court as an appellate court and affirming its decision. 2. In concluding that the evidence presented reveals serious doubts as to the veracity and authenticity of the notarized deed of donation, contrary to the findings of the trial court that there is a legal presumption of regularity in the execution thereof. 3. In holding that private respondents are entitled to possess the subject property notwithstanding petitioners claim to the contrary and despite the latters continuous, open and adverse possession for more than forty years. 36 The petitioners aver that donation is one of the modes of acquiring ownership. Their claim for possession is precisely based on the deed of donation executed by Teresa Sevilla de Leon on October 1, 1976 in favor of their father, Rosendo Florencio. The aforesaid deed was duly notarized, and by virtue of its notarization, such deed became a public document. Furthermore, according to the petitioners, an examination of the deed reveals that it had conformed to all the essential requisites of donation, as required by the provisions of the New Civil Code; hence, its validity must be presumed.37 From the time of the donation up to the present, the petitioners assert that they possessed the property openly, publicly and against the whole world. As regards the alleged forgery of the signatures of the donor and the witnesses, the petitioners assert that absent any clear, positive and convincing evidence that the same were forged, the presumption is that they are genuine. The mere variance in the signatures of the donor and the witnesses cannot be considered as conclusive proof of the forgery. They aver that the Certification dated April 23, 1996 of the Manila Records Management and Archives Office stating that no such notarized deed existed in the notarial records of Atty. Manguiat cannot be conclusive evidence that no donation ever existed. According to the petitioners, such certification was merely preponderant and, therefore, not enough to overthrow the presumption of regularity in the notarization as well as the genuineness of the document. The petitioners posit that their failure to register the deed of donation did not affect its validity, it not being a requisite of a valid donation. They allege that their effort to register the same during the lifetime of Jose de Leon, the administrator of the property, did not materialize because of the latters untimely death in 1991. The petitioners conclude that because of the respondents failure to destroy the validity of the deed of donation, their

right over the property should prevail; the petitioners right accrued on October 1, 1976, while that of the respondents accrued only in November of 1978. In their comment, the respondents, through counsel, argue that the deed of donation executed by De Leon dated October 1, 1976 in favor of Rosendo Florencio is not a credible piece of evidence. The deed is insufficient to justify the petitioners stay in the premises because the original copy was never presented to them or to the court. Furthermore, while the photocopy of the deed of donation states that it was notarized by a certain Tirso Manguiat, a notary public for the City of Manila, under Doc. 1724, Page No. 71, Book No. IV, Series of 1976, the presumption of regularity in the notarization of the deed was destroyed by the certification from the Records Management and Archives Office of Manila that no such deed exists. The respondents further assert that the signatures appearing on the said deed, i.e., that of Teresa Sevilla de Leon, Patria Manotoc and Valeriana Morente, were all forgeries. According to the respondents, the following facts bolster the incredibility of the deed of donation: (a) the deed of donation was executed in 1976 but was not registered; (b) the TCT is still registered in the name of Teresa Sevilla de Leon; (c) the owners duplicate copy of the TCT should have been transmitted to the donees; and, (d) the real estate taxes were continuously paid in the name of Teresa Sevilla de Leon. Thus, the respondents, as her heirs, are the legal owners of the property. The Ruling of the Court The threshold issue in this case is whether or not the petitioners, as heirs of Rosendo Florencio, who appears to be the donee under the unregistered Deed of Donation, have a better right to the physical or material possession of the property over the respondents, the heirs of Teresa de Leon, the registered owner of the property. The petition has no merit. Prefatorily, in ejectment cases, the issue is the physical or material possession (possession de facto) and any pronouncement made by the trial court on the question of ownership is provisional in nature.38 A judgment rendered in ejectment cases shall not bar an action between the same parties respecting title to the land and shall not be conclusive as to the facts found therein in a case between the same parties upon a different cause of action involving possession of the same property.39 We agree with the petitioners that under the New Civil Code, donation is one of the modes of acquiring ownership.40 Among the attributes of ownership is the right to possess the property.41 The essential elements of donation are as follows: (a) the essential reduction of the patrimony of the donor; (b) the increase in the patrimony of the donee; and (c) the intent to do an act of liberality or animus donandi. When applied to a donation of an immovable property, the law further requires that the donation be made in a public

document and that the acceptance thereof be made in the same deed or in a separate public instrument; in cases where the acceptance is made in a separate instrument, it is mandated that the donor be notified thereof in an authentic form, to be noted in both instruments.42 As a mode of acquiring ownership, donation results in an effective transfer of title over the property from the donor to the donee, and is perfected from the moment the donor is made aware of the acceptance by the donee, provided that the donee is not disqualified or prohibited by law from accepting the donation.43 Once the donation is accepted, it is generally considered irrevocable, and the donee becomes the absolute owner of the property, except on account of officiousness, failure by the donee to comply with the charge imposed in the donation, or ingratitude.44 The acceptance, to be valid, must be made during the lifetime of both the donor and the donee. It must be made in the same deed or in a separate public document, and the donees acceptance must come to the knowledge of the donor.45 In order that the donation of an immovable property may be valid, it must be made in a public document.46Registration of the deed in the Office of the Register of Deeds or in the Assessors Office is not necessary for it to be considered valid and official. Registration does not vest title; it is merely evidence of such title over a particular parcel of land.47 The necessity of registration comes into play only when the rights of third persons are affected.48Furthermore, the heirs are bound by the deed of contracts executed by their predecessors-in-interest.49 On the other hand, the fundamental principle is that a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein as the registered owner.50The registered owner has the right to possess, enjoy and dispose of the property without any limitations other than those imposed by law. In this case, the deed of donation, on its face, appears to bear all the essential requisites of a valid donation inter vivos. With Teresa de Leon as the donor and Rosendo Florencio as the donee, the deed of donation appears to have been notarized by Notary Public Tirso Manguiat. On this premise, Florencio, and after his death, his heirs, acquired ownership over the property although Certificate of Title No. T-44349 under the name of Teresa de Leon had not yet been cancelled. However, as pointed out by the RTC and the Court of Appeals, there are cogent facts and circumstances of substance which engender veritable doubts as to whether the petitioners have a better right of possession over the property other than the respondents, the lawful heirs of the deceased registered owner of the property, Teresa de Leon, based on the Deed of Donation. First. Teresa de Leon purportedly executed the Deed of Donation on October 1, 1976 in favor of Rosendo S. Florencio. If she, indeed, donated the property, she would surely have turned over the owners duplicate of TCT No. T -44349 to Florencio, to facilitate the

issuance of a new title over the property in his favor. There was an imperative need for the deed to be registered in the Office of the Register of Deeds, and the title to the property to be thereafter issued in the name of the donee, Florencio. Before then, Florencio and his family had been residing in the property solely at the sufferance of Teresa de Leon and her husband. Their possession of the property and their continued stay therein was precarious. They could be driven out from the property at any time by De Leon if she disowned the deed or, after her death, by her heirs. It behooved Florencio to have the said deed filed and duly registered51 with the Office of the Register of Deeds without delay and, thereafter, to secure a new title under his name. This would have resulted in the cancellation of TCT No. T-44349 under the name of Teresa de Leon, and thereby averted any disturbance of Florencios possession of the property, and after his death, that of his heirs. At the very least, Florencio should have caused the annotation of the deed immediately after October 1, 1976 or shortly thereafter, at the dorsal portion of TCT No. T-44349. Such annotation would have been binding on the respondents, as De Leons successors-in-interest, as well as to third persons. However, Florencio failed to do so. Even as De Leon died intestate in 1978, Florencio failed to secure title over the property in his name before he himself died intestate in 1995. If, as the petitioners claimed, Florencio acquired ownership over the property under the deed, it is incredible that he would fail to register the deed and secure title over the property under his name for almost twenty years. All these years, Florencio, and thereafter, his heirs, remained passive and failed to act upon the deed of donation to protect their right. This, the Court finds difficult to understand. The claim that Florencio and his heirs sought the registration of the deed and the transfer of the title to and under Florencios name from 1978 to 1991, in coordination with Jose de Leon is incredible. There is no evidence on record that the deed of donation was ever filed with and registered in the Office of the Register of Deeds at any time during the period from 1978 to 1991. The petitioners claim that the registration of the deed was delayed and later aborted by the demise of Jose de Leon is not substantiated by evidence. Moreover, there is no reason why Florencio, or after his death, the petitioners, could not have had the deed registered even after Jose de Leons death. Second. Florencio failed to inform the heirs of De Leon that the latter, before her death, had executed a deed of donation on October 1, 1976 over the property in his favor. It was only in 1996, or eighteen years after the death of De Leon when the respondents sued the petitioners for ejectment that the latter claimed, for the first time, that De Leon had executed a deed of donation over the property in favor of their predecessor, Florencio. Third. In the meantime, the respondents consistently paid the realty taxes for the property from 1978 up to 1996, completely oblivious to the existence of the deed of donation. On the other hand, Florencio, and, after his death, the petitioners, never paid a single centavo for the realty taxes due on the property, even as they continued staying

in the property without paying a single centavo therefor. The petitioners should have declared the property under their names and paid the realty taxes therefor, if they truly believed that they were its owners. They failed to do so. The fact of Florencios inaction and that of the petitioners weakened the latters claim that they acquired ownership over the property under the deed of donation. Fourth. The petitioners never adduced in evidence the owners duplicate of TCT No. T 44349 under the name of De Leon. Their possession of the owners duplicate of the title would have fortified their claim that indeed, De Leon had intended to convey the property by donation to Florencio. Furthermore, the petitioners did not explain why they failed to adduce in evidence the said owners duplicate of the title. The only conclusion is that the said owners duplicate copy was not turned over to Florencio contemporaneously with or after the execution of the deed of donation; hence, their failure to secure title over the property.52 Fifth. The respondents adduced in evidence the affidavit-complaint of Valeriana Morente dated May 8, 1996, one of the witnesses to the deed, for falsification and perjury against Florencio and Atty. Tirso Manguiat. They also adduced the Certification dated April 23, 1996 issued by Teresita R. Ignacio, Chief, Archives Division of the Records Management and Archives Division of Manila, to the effect that nothing in the notarial register of Atty. Tirso L. Manguiat, a notary public of Manila, showed that the latter notarized a Deed of Donation executed by De Leon and Florencio in San Miguel, Bulacan dated October 1, 1976. However, the petitioners failed to adduce in evidence Atty. Manguiats counter-affidavit to the said complaint, or, at the very least, a separate affidavit explaining the facts and circumstances surrounding the notarization of the deed of donation. Sixth. A reading of the deed will show that at the bottom of page one thereof, Florencio was to subscribe and swear to the truth of his acceptance of the donation before Municipal Mayor Marcelo G. Aure of San Miguel, Bulacan. However, the mayor did not affix his signature above his typewritten name, thus: SUBSCRIBED AND SWORN to before me this 1st day of October, 1976, the DONOR having exhibited her Res. Cert. No. A-3723337 issued at Quezon City on January 10, 1976. MARCELO G. AURE Municipal Mayor53 It appears that a second page was added, with the name of Atty. Manguiat typewritten therein as notary public, obviously, with the use of a different typewriter. In sum then, we agree with the RTC and the Court of Appeals that the deed of donation relied upon by the petitioners is unreliable as evidence on which to anchor a finding that the latter have a better right over the property than the respondents, who, admittedly,

are the heirs of Teresa de Leon, the registered owner of the property under TCT No. T44349 of the Registry of Deeds of Bulacan. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decisions of the Regional Trial Court of Malolos, Bulacan, Branch 20, in Civil Cases Nos. 1018-M-99 and 1019-M-99, and the Court of Appeals in CA-G.R. SP No. 59698-99, are AFFIRMED. SO ORDERED. Quisumbing, (Acting Chairman), Austria-Martinez, and Tinga, JJ., concur. Puno, (Chairman), J., on leave. G.R. No. 178906 February 18, 2009

ELVIRA T. ARANGOTE, petitioner, vs. SPS. MARTIN MAGLUNOB and LOURDES S. MAGLUNOB, and ROMEO SALIDO, Respondents. DECISION CHICO-NAZARIO, J.: Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to reverse and set aside the Decision1 dated 27 October 2006 and Resolution2 dated 29 June 2007 of the Court of Appeals in CAG.R. SP No. 64970. In its assailed Decision, the appellate court affirmed the Decision3dated 12 September 2000 of the Regional Trial Court (RTC), 6th Judicial Region, Branch 1, Kalibo, Aklan, in Civil Case No. 5511, which reversed the Decision4 dated 6 April 1998 of the 7th Municipal Circuit Trial Court (MCTC) of IbajayNabas, Ibajay, Aklan, in Civil Case No. 156; and declared5 the herein respondentSpouses Martin and Lourdes Maglunob (Spouses Maglunob) and respondent Romeo Salido (Romeo) as the lawful owners and possessors of Lot 12897 with an area of 982 square meters, more or less, located in Maloco, Ibajay, Aklan (subject property). In its assailed Resolution, the appellate court denied herein petitioner Elvira T. Arangotes Motion for Reconsideration. Elvira T. Arangote, herein petitioner married to Ray Mars E. Arangote, is the registered owner of the subject property, as evidenced by Original Certificate of Title (OCT) No. CLOA-1748.6 Respondents Martin (Martin II) and Romeo are first cousins and the grandnephews of Esperanza Maglunob-Dailisan (Esperanza), from whom petitioner acquired the subject property. The Petition stems from a Complaint7 filed by petitioner and her husband against the respondents for Quieting of Title, Declaration of Ownership and Possession, Damages

with Preliminary Injunction, and Issuance of Temporary Restraining Order before the MCTC, docketed as Civil Case No. 156. The Complaint alleged that Esperanza inherited the subject property from her uncle Victorino Sorrosa by virtue of a notarized Partition Agreement8 dated 29 April 1985, executed by the latters heirs. Thereafter, Esperanza declared the subject property in her name for real property tax purposes, as evidenced by Tax Declaration No. 16218 (1985).9 The Complaint further stated that on 24 June 1985, Esperanza executed a Last Will and Testament10 bequeathing the subject property to petitioner and her husband, but it was never probated. On 9 June 1986, Esperanza executed another document, an Affidavit,11 in which she renounced, relinquished, waived and quitclaimed all her rights, share, interest and participation whatsoever in the subject property in favor of petitioner and her husband. On the basis thereof, Tax Declaration No. 16218 in the name of Esperanza was cancelled and Tax Declaration No. 1666612 (1987) was issued in the name of the petitioner and her husband. In 1989, petitioner and her husband constructed a house on the subject property. On 26 March 1993, OCT No. CLOA-1748 was issued by the Secretary of the Department of Agrarian Reform (DAR) in the name of petitioner, married to Ray Mars E. Arangote. However, respondents, together with some hired persons, entered the subject property on 3 June 1994 and built a hollow block wall behind and in front of petitioners house, which effectively blocked the entrance to its main door. As a consequence thereof, petitioner and her husband were compelled to institute Civil Case No. 156. In their Answer with Counterclaim in Civil Case No. 156, respondents averred that they co-owned the subject property with Esperanza. Esperanza and her siblings, Tomas and Inocencia, inherited the subject property, in equal shares, from their father Martin Maglunob (Martin I). When Tomas and Inocencia passed away, their shares passed on by inheritance to respondents Martin II and Romeo, respectively. Hence, the subject property was co-owned by Esperanza, respondent Martin II (together with his wife Lourdes), and respondent Romeo, each holding a one-third pro-indiviso share therein. Thus, Esperanza could not validly waive her rights and interest over the entire subject property in favor of the petitioner. Respondents also asserted in their Counterclaim that petitioner and her husband, by means of fraud, undue influence and deceit were able to make Esperanza, who was already old and illiterate, affix her thumbmark to the Affidavit dated 9 June 1986, wherein she renounced all her rights and interest over the subject property in favor of petitioner and her husband. Respondents thus prayed that the OCT issued in petitioners name be declared null and void insofar as their two-thirds shares are concerned.

After trial, the MCTC rendered its Decision dated 6 April 1998 in Civil Case No. 156, declaring petitioner and her husband as the true and lawful owners of the subject property. The decretal portion of the MCTC Decision reads: WHEREFORE, judgment is hereby rendered: A. Declaring the [herein petitioner and her husband] the true, lawful and exclusive owners and entitled to the possession of the [subject property] described and referred to under paragraph 2 of the [C]omplaint and covered by Tax Declaration No. 16666 in the names of the [petitioner and her husband]; B. Ordering the [herein respondents] and anyone hired by, acting or working for them, to cease and desist from asserting or claiming any right or interest in, or exercising any act of ownership or possession over the [subject property]; C. Ordering the [respondents] to pay the [petitioner and her husband] the amount of P10,000.00 as attorneys fee. With cost against the [respondents]. 13 The respondents appealed the aforesaid MCTC Decision to the RTC. Their appeal was docketed as Civil Case No. 5511. Respondents argued in their appeal that the MCTC erred in not dismissing the Complaint filed by the petitioner and her husband for failure to identify the subject property therein. Respondents further faulted the MCTC for not declaring Esperanzas Affidavit dated 9 June 1986 -- relinquishing all her rights and interest over the subject property in favor of petitioner and her husband -- as null and void insofar as respondents two-thirds share in the subject property is concerned. On 12 September 2000, the RTC rendered its Decision reversing the MCTC Decision dated 6 April 1998. The RTC adjudged respondents, as well as the other heirs of Martin Maglunob, as the lawful owners and possessors of the entire subject property. The RTC decreed: WHEREFORE, judgment is hereby rendered as follows: 1) The appealed [D]ecision is REVERSED; 2) [Herein respondents] and the other heirs of Martin Maglunob are declared the lawful owners and possessors of the whole [subject property] as described in Paragraph 2 of the [C]omplaint, as against the [herein petitioner and her husband]. 3) [Petitioner and her husband] are ordered to immediately turn over possession of the [subject property] to the [respondents] and the other heirs of Martin Maglunob; and

4) [Petitioner and her husband] are ordered to pay [respondents] attorne ys fees of P5,000.00, other litigation expenses of P5,000.00, moral damages of P10,000.00 and exemplary damages of P5,000.00.14 Petitioner and her husband filed before the RTC, on 26 September 2000, a Motion for New Trial or Reconsideration15 on the ground of newly discovered evidence consisting of a Deed of Acceptance16 dated 23 September 2000, and notice17 of the same, which were both made by the petitioner, for herself and in behalf of her husband, 18 during the lifetime of Esperanza. In the RTC Order19 dated 2 May 2001, however, the RTC denied the aforesaid Motion for New Trial or Reconsideration. The petitioner and her husband then filed a Petition for Review, under Rule 42 of the 1997 Revised Rules of Civil Procedure, before the Court of Appeals, where the Petition was docketed as CA-G.R. SP No. 64970. In their Petition before the appellate court, petitioner and her husband raised the following errors committed by the RTC in its 12 September 2000 Decision: I. It erred in reversing the [D]ecision of the [MCTC]; II. It erred in declaring the [herein respondents] and the other heirs of Martin Maglunob as the lawful owners and possessors of the whole [subject property]; III. It erred in declaring [OCT] No. CLOA-1748 in the name of [herein petitioner] Elvie T. Arangote as null and void; IV. It erred in denying [petitioner and her husbands] [M]otion for [N]ew [T]rial or [R]econsideration dated [26 September 2000; and V. It erred in not declaring the [petitioner and her husband] as possessors in good faith.20 On 27 October 2006, the Court of Appeals rendered a Decision denying the Petition for Review of petitioner and her husband and affirming the RTC Decision dated 12 September 2000. Petitioner and her husbands subsequent Motion for Reconsideration was similarly denied by the Court of Appeals in its Resolution dated 29 June 2007. Hence, petitioner21 now comes before this Court raising in her Petition the following issues: I. Whether the [RTC] acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it declared the [petitioner and her husbands title to the subject property] null and void; II. Whether the [RTC] acted with grave abuse of discretion amounting to lack of jurisdiction when it declared the Affidavit of Quitclaim null and void; and

III. Whether the [RTC] and the Honorable Court of Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it rejected petitioners claim as possessors (sic) in good faith, hence, entitled to the rights provided in [Article] 448 and [Article] 546 of the Civil Code.22 Petitioner contends that the aforesaid OCT No. CLOA-1748 was issued in her name on 26 March 1993 and was registered in the Registry of Deeds of Aklan on 20 April 1993. From 20 April 1993 until the institution of Civil Case No. 156 on 10 June 1994 before the MCTC, more than one year had already elapsed. Considering that a Torrens title can only be attacked within one year after the date of the issuance of the decree of registration on the ground of fraud and that such attack must be through a direct proceeding, it was an error on the part of the RTC and the Court of Appeals to declare OCT No. CLOA-1748 null and void. Petitioner additionally posits that both the RTC and the Court of Appeals committed a mistake in declaring null and void the Affidavit dated 9 June 1986 executed by Esperanza, waiving all her rights and interest over the subject property in favor of petitioner and her husband. Esperanzas Affidavit is a valid and binding proof of the transfer of ownership of the subject property in petitioners name, as it was also coupled with actual delivery of possession of the subject property to petitioner and her husband. The Affidavit is also proof of good faith on the part of petitioner and her husband. Finally, petitioner argues that, assuming for the sake of argument, that Esperanzas Affidavit is null and void, petitioner and her husband had no knowledge of any flaw in Esperanzas title when the latter relinquished her rights to and interest in the subject property in their favor. Hence, petitioner and her husband can be considered as possessors in good faith and entitled to the rights provided under Articles 448 and 546 of the Civil Code. This present Petition is devoid of merit. It is a hornbook doctrine that the findings of fact of the trial court are entitled to great weight on appeal and should not be disturbed except for strong and valid reasons, because the trial court is in a better position to examine the demeanor of the witnesses while testifying. It is not a function of this Court to analyze and weigh evidence by the parties all over again. This Courts jurisdiction is, in principle, limited to reviewing errors of law that might have been committed by the Court of Appeals.23 This rule, however, is subject to several exceptions,24 one of which is present in this case, i.e., when the factual findings of the Court of Appeals and the trial court are contradictory. In this case, the findings of fact of the MCTC as regards the origin of the subject property are in conflict with the findings of fact of both the RTC and the Court of Appeals. Hence, this Court will have to examine the records to determine first the true origin of the subject property and to settle whether the respondents have the right over the same for being co-heirs and co-owners, together with their grand aunt, Esperanza, before this Court can resolve the issues raised by the petitioner in her Petition.

After a careful scrutiny of the records, this Court affirms the findings of both the RTC and the Court of Appeals as regards the origin of the subject property and the fact that respondents, with their grand aunt Esperanza, were co-heirs and co-owners of the subject property. The records disclosed that the subject property was part of a parcel of land 25 situated in Maloco, Ibajay, Aklan, consisting of 7,176 square meters and commonly owned in equal shares by the siblings Pantaleon Maglunob (Pantaleon) and Placida Maglunob-Sorrosa (Placida). Upon the death of Pantaleon and Placida, their surviving and legal heirs executed a Deed of Extrajudicial Settlement and Partition of Estate in July 1981,26 however, the Deed was not notarized. Considering that Pantaleon died without issue, his one-half share in the parcel of land he co-owned with Placida passed on to his four siblings (or their respective heirs, if already deceased), namely: Placida, Luis, Martin I, and Victoria, in equal shares. According to the aforementioned Deed of Extrajudicial Settlement and Partition of Estate, the surviving and legal heirs of Pantaleon and Placida agreed to have the parcel of land commonly owned by the siblings declared for real property tax purposes in the name of Victorino Sorrosa (Victorino), Placidas husband. Thus, Tax Declarations No. 5988 (1942),27 No. 6200 (1945)28 and No. 7233 (1953)29 were all issued in the name of Victorino. Since Martin I already passed away when the Deed of Extrajudicial Settlement and Partition of Estate was executed, his heirs30 were represented therein by Esperanza. By virtue of the said Deed, Martin I received as inheritance a portion of the parcel of land measuring 897 square meters. After the death of Victorino, his heirs31 executed another Partition Agreement on 29 April 1985, which was notarized on the same date. The Partition Agreement mentioned four parcels of land. The subject property, consisting of a portion of the consolidated parcels 1, 2, and 3, and measuring around 982 square meters, was allocated to Esperanza. In comparison, the property given to Esperanza under the Partition Agreement is bigger than the one originally allocated to her earlier under the Deed of Extrajudicial Settlement and Partition of Estate dated July 1981, which had an area of only 897 square meters. It may be reasonably assumed, however, that the subject property, measuring 982 square meters, allocated to Esperanza under the Partition Agreement dated 29 April 1985, is already inclusive of the smaller parcel of 897 square meters assigned to her under the Deed of Extrajudicial Settlement and Partition of Estate dated July 1981. As explained by the RTC in its 12 September 2000 Decision: The [subject property] which is claimed by the [herein petitioner and her husband] and that which is claimed by the [herein respondents] are one and the same, the difference in area and technical description being due to the repartition and re-allocation of the parcel of land originally co-owned by Pantaleon Maglunob and his sister Placida Maglunob and subsequently declared in the name of [Victorino] under Tax Declaration No. 5988 of 1949.32

It is clear from the records that the subject property was not Esperanzas exclusive share, but also that of the other heirs of her father, Martin I. Esperanza expressly affixed her thumbmark to the Deed of Extrajudicial Settlement of July 1981 not only for herself, but also on behalf of the other heirs of Martin I. Though in the Partition Agreement dated 29 April 1985 Esperanza affixed her thumbmark without stating that she was doing so not only for herself, but also on behalf of the other heirs of Martin I, this does not mean that Esperanza was already the exclusive owner thereof. The evidence shows that the subject property is the share of the heirs of Martin I. This is clear from the sketch33 attached to the Partition Agreement dated 29 April 1985, which reveals the proportionate areas given to the heirs of the two siblings, Pantaleon and Placida, who were the original owners of the whole parcel of land34from which the subject property was taken. Further, it bears emphasis that the Partition Agreement was executed by and among the son, grandsons, granddaughters and cousins of Victorino. Esperanza was neither the granddaughter nor the cousin of Victorino, as she was only Victorinos grandniece. The cousin of Victorino is Martin I, Esperanzas father. In effect, therefore, the subject property allotted to Esperanza in the Partition Agreement was not her exclusive share, as she holds the same for and on behalf of the other heirs of Martin I, who was already deceased at the time the Partition Agreement was made. To further bolster the truth that the subject property was not exclusively owned by Esperanza, the Affidavit she executed in favor of petitioner and her husband on 6 June 1985 was worded as follows: That I hereby renounce, relinquish, waive and quitclaim all my rights, share, interest and participation whatsoever in the [subject property] unto the said Sps. Ray Mars Arangote and Elvira T. Arangote, their heirs, successors, and assigns including the improvement found thereon;35 Logically, if Esperanza fully owned the subject property, she would have simply waived her rights to and interest in the subject property, without mentioning her "share" and "participation" in the same. By including such words in her Affidavit, Esperanza was aware of and was limiting her waiver, renunciation, and quitclaim to her one-third share and participation in the subject property. Going to the issues raised by the petitioner in this Petition, this Court will resolve the same concurrently as they are interrelated. In this case, the petitioner derived her title to the subject property from the notarized Affidavit executed by Esperanza, wherein the latter relinquished her rights, share, interest and participation over the same in favor of the petitioner and her husband. A careful perusal of the said Affidavit reveals that it is not what it purports to be. Esperanzas Affidavit is, in fact, a Donation. Esperanzas real intent in executing the

said Affidavit was to donate her share in the subject property to petitioner and her husband. As no onerous undertaking is required of petitioner and her husband under the said Affidavit, the donation is regarded as a pure donation of an interest in a real property covered by Article 749 of the Civil Code.36 Article 749 of the Civil Code provides: Art. 749. In order that the donation of an immovable may be valid, it must be made in a public document, specifying therein the property donated and the value of the charges which the donee must satisfy. The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor. If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments. From the aforesaid provision, there are three requisites for the validity of a simple donation of a real property, to wit: (1) it must be made in a public instrument; (2) it must be accepted, which acceptance may be made either in the same Deed of Donation or in a separate public instrument; and (3) if the acceptance is made in a separate instrument, the donor must be notified in an authentic form, and the same must be noted in both instruments. This Court agrees with the RTC and the Court of Appeals that the Affidavit executed by Esperanza relinquishing her rights, share, interest and participation over the subject property in favor of the petitioner and her husband suffered from legal infirmities, as it failed to comply with the aforesaid requisites of the law. In Sumipat v. Banga,37 this Court declared that title to immovable property does not pass from the donor to the donee by virtue of a Deed of Donation until and unless it has been accepted in a public instrument and the donor duly notified thereof. The acceptance may be made in the very same instrument of donation. If the acceptance does not appear in the same document, it must be made in another. Where the Deed of Donation fails to show the acceptance, or where the formal notice of the acceptance, made in a separate instrument, is either not given to the donor or else not noted in the Deed of Donation and in the separate acceptance, the donation is null and void. 38 In the present case, the said Affidavit, which is tantamount to a Deed of Donation, met the first requisite, as it was notarized; thus, it became a public instrument. Nevertheless, it failed to meet the aforesaid second and third requisites. The acceptance of the said donation was not made by the petitioner and her husband either in the same Affidavit or in a separate public instrument. As there was no acceptance made of the said donation, there was also no notice of the said acceptance given to the donor, Esperanza. Therefore, the Affidavit executed by Esperanza in favor of petitioner and her husband is null and void.

The subsequent notarized Deed of Acceptance39 dated 23 September 2000, as well as the notice40 of such acceptance, executed by the petitioner did not cure the defect. Moreover, it was only made by the petitioner several years after the Complaint was filed in court, or when the RTC had already rendered its Decision dated 12 September 2000, although it was still during Esperanzas lifetime. Evidently, its execution was a mere afterthought, a belated attempt to cure what was a defective donation. It is true that the acceptance of a donation may be made at any time during the lifetime of the donor. And granting arguendo that such acceptance may still be admitted in evidence on appeal, there is still need for proof that a formal notice of such acceptance was received by the donor and noted in both the Deed of Donation and the separate instrument embodying the acceptance.41 At the very least, this last legal requisite of annotation in both instruments of donation and acceptance was not fulfilled by the petitioner. Neither the Affidavit nor the Deed of Acceptance bears the fact that Esperanza received notice of the acceptance of the donation by petitioner. For this reason, even Esperanzas one-third share in the subject property cannot be adjudicated to the petitioner. With the foregoing, this Court holds that the RTC and the Court of Appeals did not err in declaring null and void Esperanzas Affidavit. The next issue to be resolved then is whether the RTC, as well as the Court of Appeals, erred in declaring OCT No. CLOA-1748 in the name of petitioner and her husband null and void. Again, this Court answers the said issue in the negative. Section 48 of Presidential decree No. 1529 states: SEC. 48. Certificate not subject to collateral attack. - A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law. Such proscription has long been enshrined in Philippine jurisprudence. The judicial action required to challenge the validity of title is a direct attack, not a collateral attack.42 The attack is considered direct when the object of an action is to annul or set aside such proceeding, or enjoin its enforcement. Conversely, an attack is indirect or collateral when, in an action to obtain a different relief, an attack on the proceeding is nevertheless made as an incident thereof. Such action to attack a certificate of title may be an original action or a counterclaim, in which a certificate of title is assailed as void. 43 A counterclaim is considered a new suit in which the defendant is the plaintiff and the plaintiff in the complaint becomes the defendant. It stands on the same footing as, and is to be tested by the same rules as if it were, an independent action. 44

In their Answer to the Complaint for Quieting of Title filed by the petitioner and her husband before the MCTC, respondents included therein a Counterclaim wherein they repleaded all the material allegations in their affirmative defenses, the most essential of which was their claim that petitioner and her husband -- by means of fraud, undue influence and deceit -- were able to make their grand aunt, Esperanza, who was already old and illiterate, affix her thumbmark to the Affidavit, wherein she renounced, waived, and quitclaimed all her rights and interest over the subject property in favor of petitioner and her husband. In addition, respondents maintained in their Answer that as petitioner and her husband were not tenants either of Esperanza or of the respondents, the DAR could not have validly issued in favor of petitioner and her husband OCT No. CLOA1748. Thus, the respondents prayed, in their counterclaim in Civil Case No. 156 before the MCTC, that OCT No. CLOA-1748 issued in the name of petitioner, married to Ray Mars E. Arangote, be declared null and void, insofar as their two-thirds shares in the subject property are concerned. It is clear, thus, that respondents Answer with Counterclaim was a direct attack on petitioners certificate of title. Furthermore, since all the essential facts of the case for the determination of the validity of the title are now before this Court, to require respondents to institute a separate cancellation proceeding would be pointlessly circuitous and against the best interest of justice. Esperanzas Affidavit, which was the sole basis of petitioners claim to the subject property, has been declared null and void. Moreover, petitioner and her husband were not tenants of the subject property. In fact, petitioner herself admitted in her Complaint filed before the MCTC that her husband is out of the country, rendering it impossible for him to work on the subject property as a tenant. Instead of cultivating the subject property, petitioner and her husband possessed the same by constructing a house thereon. Thus, it is highly suspicious how the petitioner was able to secure from the DAR a Certificate of Land Ownership Award (CLOA) over the subject property. The DAR awards such certificates to the grantees only if they fulfill the requirements of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Program (CARP).45 Hence, the RTC and the Court of Appeals did not err in declaring null and void OCT No. CLOA-1748 in the name of the petitioner, married to Ray Mars E. Arangote. Considering that Esperanza died without any compulsory heirs and that the supposed donation of her one-third share in the subject property per her Affidavit dated 9 June 1985 was already declared null and void, Esperanzas one -third share in the subject property passed on to her legal heirs, the respondents. As petitioners last-ditch effort, she claims that she is a possessor in good faith and, thus, entitled to the rights provided for under Articles 448 and 546 of the Civil Code. This claim is untenable. The Civil Code describes a possessor in good faith as follows:

Art. 526. He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing. Mistake upon a doubtful or difficult question of law may be the basis of good faith. Art. 1127. The good faith of the possessor consists in the reasonable belief that the person from whom he received the thing was the owner thereof, and could transmit his ownership. Possession in good faith ceases from the moment defects in the title are made known to the possessor by extraneous evidence or by a suit for recovery of the property by the true owner. Every possessor in good faith becomes a possessor in bad faith from the moment he becomes aware that what he believed to be true is not so. 46 In the present case, when respondents came to know that an OCT over the subject property was issued and registered in petitioners name on 26 March 1993, resp ondents brought a Complaint on 7 August 1993 before the Lupon of Barangay Maloco, Ibajay, Aklan, challenging the title of petitioner to the subject property on the basis that said property constitutes the inheritance of respondent, together with their grandaunt Esperanza, so Esperanza had no authority to relinquish the entire subject property to petitioner. From that moment, the good faith of the petitioner had ceased. Petitioner cannot be entitled to the rights under Articles 448 and 546 of the Civil Code, because the rights mentioned therein are applicable only to builders in good faith and not to possessors in good faith. Moreover, the petitioner cannot be considered a builder in good faith of the house on the subject property. In the context that such term is used in particular reference to Article 448 of the Civil Code, a builder in good faith is one who, not being the owner of the land, builds on that land, believing himself to be its owner and unaware of any defect in his title or mode of acquisition.47 The various provisions of the Civil Code, pertinent to the subject, read: Article 448. The owner of the land on which anything has been built, sown, or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such a case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.1avvphi1

Article 449. He who builds, plants, or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity. Article 450. The owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the work, or that the planting or sowing be removed, in order to replace things in their former condition at the expense of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of the land, and the sower the proper rent. Under the foregoing provisions, the builder in good faith can compel the landowner to make a choice between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to instead remove it from the land. In order, however, that the builder can invoke that accruing benefit and enjoy his corresponding right to demand that a choice be made by the landowner, he should be able to prove good faith on his part.48 Good faith, here understood, is an intangible and abstract quality with no technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage. An individuals personal good faith is a concept of his own mind and, therefore, may not conclusively be determined by his protestations alone. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry. The essence of good faith lies in an honest belief in the validity of ones right, ignorance of a superior claim, and absence of intention to overreach another. Applied to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. 49 In this case, the subject property waived and quitclaimed by Esperanza to the petitioner and her husband in the Affidavit was only covered by a tax declaration in the name of Esperanza. Petitioner did not even bother to look into the origin of the subject property and to probe into the right of Esperanza to relinquish the same. Thus, when petitioner and her husband built a house thereon in 1989 they cannot be considered to have acted in good faith as they were fully aware that when Esperanza executed an Affidavit relinquishing in their favor the subject property the only proof of Esperanzas ownership over the same was a mere tax declaration. This fact or circumstance alone was enough to put the petitioner and her husband under inquiry. Settled is the rule that a tax declaration does not prove ownership. It is merely an indicium of a claim of ownership. Payment of taxes is not proof of ownership; it is, at best, an indicium of possession in the concept of ownership. Neither tax receipts nor a declaration of ownership for taxation purposes is evidence of ownership or of a right to possess realty when not supported by other effective proofs.50

With the foregoing, the petitioner is not entitled to the rights under Article 448 and 546 as the petitioner is not a builder and possessor in good faith. WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 64970, dated 27 October 2006 and 29 June 2007, respectively, affirming the RTC Decision dated 12 September 2000 in Civil Case No. 5511 and declaring the respondents the lawful owners and possessors of the subject property are hereby AFFIRMED. No costs. SO ORDERED. MINITA V. CHICO-NAZARIO Associate Justice G.R. No. 132681 December 3, 2001

RICKY Q. QUILALA, petitioner, vs. GLICERIA ALCANTARA, LEONORA ALCANTARA, INES REYES and JOSE REYES, respondent. YNARES-SANTIAGO, J.: On February 20, 1981, Catalina Quilala executed a "Donation of Real Property Inter Vivos" in favor of Violeta Quilala over a parcel of land located in Sta. Cruz, Manila, containing an area of 94 square meters, and registered in her name under Transfer Certificate of Title No. 17214 of the Register of Deeds for Manila. The "Donation of Real Property Inter Vivos" consists of two pages. The first page contains the deed of donation itself, and is signed on the bottom portion by Catalina Quilala as donor, Violeta Quilala as donee, and two instrumental witnesses. 1 The second page contains the Acknowledgment, which states merely that Catalina Quilala personally appeared before the notary public and acknowledged that the donation was her free and voluntary act and deed. There appear on the left-hand margin of the second page the signatures of Catalina Quilala and one of the witnesses, and on the right-hand margin the signatures of Violeta Quilala and the other witness. 2 The Acknowledgment reads: REPUBLIC OF THE PHILIPPINES ) QUEZON CITY ) S.S. Before Me, a Notary Public, for and in the City of Quezon, Philippines, this 20th day of Feb. 1981, personally appeared CATALINA QUILALA, with Residence Certificate No. 19055265 issued at Quezon City on February 4, 1981, known to me and to me known to be the same person who executed the foregoing

instruments and acknowledged to me that the same is her own free and voluntary act and deed. I hereby certify that this instrument consisting of two (2) pages, including the page on which this acknowledgment is written, has been signed by CATALINA QUILALA and her instrumental witnesses at the end thereof and on the left-hand margin of page 2 and both pages have been sealed with my notarial seal. In witness whereof, I have hereunto set my hand, in the City of Quezon, Philippines, this 20th day of Feb., 1981. (SGD.) NOTARY PUBLIC Until December 31, 1981 (illegible) DOC NO. 22; PAGE NO. 6; BOOK NO. XV; SERIES OF 1981. The deed of donation was registered with the Register of Deeds and, in due course, TCT No. 17214 was cancelled and TCT No. 143015 was issued in the name of Violeta Quilala. On November 7, 1983, Catalina Quilala died. Violeta Quilala likewise died on May 22, 1984. Petitioner Ricky Quilala alleges that he is the surviving son of Violeta Quilala. Meanwhile, respondents Gliceria Alcantara, Leonora Alcantara, Ines Reyes and Juan Reyes, claiming to be Catalina's only surviving relatives within the fourth civil degree of consanguinity, executed a deed of extrajudicial settlement of estate, dividing and adjudicating unto themselves the above-described property. On September 13, 1984, respondents instituted against petitioner and Guillermo T. San Pedro, the Registrar of Deeds of Manila, an action for the declaration of nullity of the donation inter vivos, and for the cancellation of TCT No. 143015 in the name of Violeta Quilala. The case was docketed as Civil Case No. 84-26603 of the Regional Trial Court of Manila, Branch 17. Subsequently, respondents withdrew their complaint as against Guillermo T. San Pedro and he was dropped as a party-defendant. The trial court found that the deed of donation, although signed by both Catalina and Violeta, was acknowledged before a notary public only by the donor, Catalina.

Consequently, there was no acceptance by Violeta of the donation in a public instrument, thus rendering the donation null and void. Furthermore, the trial court held that nowhere in Catalina's SSS records does it appear that Violeta was Catalina's daughter. Rather, Violeta was referred to therein as an adopted child, but there was no positive evidence that the adoption was legal. On the other hand, the trial court found that respondents were first cousins of Catalina Quilala. However, since it appeared that Catalina died leaving a will, the trial court ruled that respondents' deed of extrajudicial settlement can not be registered. The trial court rendered judgment as follows: WHEREFORE, judgment is hereby rendered in favor of plaintiffs Gliceria Alcantara, Leonarda Alcantara, Ines Reyes and Juan Reyes and against defendant Ricky A. Quilala, as follows: 1. Declaring null and void the deed of donation of real property inter vivos executed on February 20, 1981 by Catalina Quilala in favor of Violeta Quilala (Exhs. A as well as 11 and 11-A.); 2. Ordering the Register of Deeds of Manila to cancel Transfer Certificate of Title No. 143015 in the name of Violeta Quilala and to issue a transfer certificate of title in the name of the Estate of Catalina Quilala;. 3. Dismissing the complaint insofar as it seeks the registration of the deed of extrajudicial settlement (Exhs. B and B-1,) and the issuance by the Register of Deeds of Manila of a transfer certificate of title in the names of the plaintiffs; and 4. Dismissing the counterclaim of defendant Ricky A. Quilala. No costs. SO ORDERED.3 Petitioner appealed the aforesaid decision. On July 30, 1997, the Court of Appeals rendered a decision affirming with modification the decision of the trial court by dismissing the complaint for lack of cause of action without prejudice to the filing of probate proceedings of Catalina's alleged last will and testament. 4 WHEREFORE, the appealed decision is hereby AFFIRMED with the following MODIFICATION: (3) DISMISSING the complaint for lack of cause of action without prejudice to the filing of the necessary probate proceedings by the interested parties so as not to render nugatory the right of the lawful heirs. Petitioner filed a motion for reconsideration, which the Court of Appeals denied on February 11, 1998.5 Hence, this petition for review, raising the following assignment of errors:

A. THE COURT OF APPEALS ERRED IN RULING THAT THE DEED OF DONATION OF REAL PROPERTY INTER-VIVOS IS NOT REGISTRABLE. B. THE COURT OF APPEALS ERRED ON UPHOLDING THE LOWER COURT'S RULING THAT VIOLETA QUILALA IS NOT THE DAUGHTER OF CATALINA QUILALA.6 The principal issue raised is the validity of the donation executed by Catalina in favor of Violeta. Under Article 749 of the Civil Code, the donation of an immovable must be made in a public instrument in order to be valid,7specifying therein the property donated and the value of the charges which the donee must satisfy. As a mode of acquiring ownership, donation results in an effective transfer of title over the property from the donor to the donee,8 and is perfected from the moment the donor knows of the acceptance by the donee,9 provided the donee is not disqualified or prohibited by law from accepting the donation. Once the donation is accepted, it is generally considered irrevocable,10 and the donee becomes the absolute owner of the property. 11 The acceptance, to be valid, must be made during the lifetime of both the donor and the donee.12 It may be made in the same deed or in a separate public document, 13 and the donor must know the acceptance by the donee.14 In the case at bar, the deed of donation contained the number of the certificate of title as well as the technical description of the real property donated. It stipulated that the donation was made for and in consideration of the "love and affection which the DONEE inspires in the DONOR, and as an act of liberality and generosity." 15 This was sufficient cause for a donation. Indeed, donation is legally defined as "an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it." 16 The donee's acceptance of the donation was explicitly manifested in the penultimate paragraph of the deed, which reads: That the DONEE hereby receives and accepts the gift and donation made in her favor by the DONOR and she hereby expresses her appreciation and gratefulness for the kindness and generosity of the DONOR.17 Below the terms and stipulations of the donation, the donor, donee and their witnesses affixed their signature. However, the Acknowledgment appearing on the second page mentioned only the donor, Catalina Quilala. Thus, the trial court ruled that for Violeta's failure to acknowledge her acceptance before the notary public, the same was set forth merely on a private instrument, i.e., the first page of the instrument. We disagree. The pertinent provision is Section 112, paragraph 2 of Presidential Decree No. 1529, which states: Deeds, conveyances, encumbrances, discharges, powers of attorney and other voluntary instruments, whether affecting registered or unregistered land, executed in accordance with law in the form of public instruments shall

be registrable: Provided, that, every such instrument shall be signed by person or persons executing the same in the presence of at least two witnesses who shall likewise sign thereon, and shall be acknowledged to be the free act and deed of the person or persons executing the same before a notary public or other public officer authorized by law to take acknowledgment. Where the instrument so acknowledged consists of two or more pages including the page whereon acknowledgment is written, each page of the copy which is to be registered in the office of the Register of Deeds, or if registration is not contemplated, each page of the copy to be kept by the notary public, except the page where the signatures already appear at the foot of the instrument shall be signed on the left margin thereof by the person or persons executing the instrument and their witnesses, and all the pages sealed with the notarial seal, and this fact as well as the number of pages shall be stated in the acknowledgment. Where the instrument acknowledged relates to a sale, transfer, mortgage or encumbrance of two or more parcels of land, the number thereof shall likewise be set forth in said acknowledgment." (italics supplied). As stated above, the second page of the deed of donation, on which the Acknowledgment appears, was signed by the donor and one witness on the left-hand margin, and by the donee and the other witness on the right hand margin. Surely, the requirement that the contracting parties and their witnesses should sign on the left-hand margin of the instrument is not absolute. The intendment of the law merely is to ensure that each and every page of the instrument is authenticated by the parties. The requirement is designed to avoid the falsification of the contract after the same has already been duly executed by the parties. Hence, a contracting party affixes his signature on each page of the instrument to certify that he is agreeing to everything that is written thereon at the time of signing. Simply put, the specification of the location of the signature is merely directory. The fact that one of the parties signs on the wrong side of the page does not invalidate the document. The purpose of authenticating the page is served, and the requirement in the above-quoted provision is deemed substantially complied with. In the same vein, the lack of an acknowledgment by the donee before the notary public does not also render the donation null and void. The instrument should be treated in its entirety. It cannot be considered a private document in part and a public document in another part. The fact that it was acknowledged before a notary public converts the deed of donation in its entirety a public instrument. The fact that the donee was not mentioned by the notary public in the acknowledgment is of no moment. To be sure, it is the conveyance that should be acknowledged as a free and voluntary act. In any event, the donee signed on the second page, which contains the Acknowledgment only. Her acceptance, which is explicitly set forth on the first page of the notarized deed of donation, was made in a public instrument. It should be stressed that this Court, not being a trier of facts, can not make a determination of whether Violeta was the daughter of Catalina, or whether petitioner is

the son of Violeta. These issues should be ventilated in the appropriate probate or settlement proceedings affecting the respective estates of Catalina and Violeta. Suffice it to state that the donation, which we declare herein to be valid, will still be subjected to a test on its inofficiousness under Article 771,18 in relation to Articles 752, 911 and 912 of the Civil Code. Moreover, property donated inter vivos is subject to collation after the donor's death,19 whether the donation was made to a compulsory heir or a stranger,20 unless there is an express prohibition if that had been the donor's intention. 21 WHEREFORE, in view of the foregoing, the petition is GRANTED. The appealed decision of the Court of Appeals , is REVERSED and SET ASIDE, and a new judgment is rendered dismissing Civil Case No. 84-26603. SO ORDERED. Davide, Jr., C. J.; Puno, Kapunan, and Pardo, JJ., concur. Article 750 G.R. No. 155080 February 5, 2004

SOLEDAD CALICDAN, represented by her guardian GUADALUPE CASTILLO, petitioner vs. SILVERiO CENDAA, substituted by his legal heir CELSA CENDAAALARAS, respondent. DECISION YNARES-SANTIAGO, J.: This petition for review seeks the reversal of the April 4, 2002 decision of the Court of Appeals in CA-G.R. CV No. 67266,1 which set aside the November 12, 1996 decision of the Regional Trial Court of Dagupan City, Branch 44 in Civil Case No. D-10270.2 The instant controversy involves a 760 square meter parcel of unregistered land located in Poblacion, Mangaldan, Pangasinan. The land was formerly owned by Sixto Calicdan, who died intestate on November 4, 1941. He was survived by his wife, Fermina, and three children, namely, petitioner Soledad, Jose and Benigno, all surnamed Calicdan. 3 On August 25, 1947, Fermina executed a deed of donation inter vivos whereby she conveyed the land to respondent Silverio Cendaa,4 who immediately entered into possession of the land, built a fence around the land and constructed a two-storey residential house thereon sometime in 1949, where he resided until his death in 1998. 5 On June 29, 1992, petitioner, through her legal guardian Guadalupe Castillo, filed a complaint for "Recovery of Ownership, Possession and Damages" against the

respondent, alleging that the donation was void; that respondent took advantage of her incompetence in acquiring the land; and that she merely tolerated respondents possession of the land as well as the construction of his house thereon.6 In his "Answer with Motion to Dismiss", respondent alleged, by way of affirmative defenses, that the land was donated to him by Fermina in 1947; and that he had been publicly, peacefully, continuously, and adversely in possession of the land for a period of 45 years. Moreover, he argued that the complaint was barred by prior judgment in the special proceedings for the "Inventory of Properties of Incompetent Soledad Calicdan", where the court decreed the exclusion of the land from the inventory of properties of the petitioner.7 On November 12, 1996, the trial court rendered a decision in favor of the petitioner, the dispositive portion of which reads as follows: WHEREFORE, judgment is rendered in favor of plaintiff and against the defendant as follows: 1. Ordering defendant Silverio Cendaa to vacate the land in question and surrender ownership and possession of the same to plaintiff; and 2. Ordering defendant to pay plaintiff P20,000.00 as moral damages, P20,000.00 as exemplary damages, P10,000.00 by way of attorneys fees and other litigation expenses, plus cost of suit. SO ORDERED.8 On appeal by the respondent, the Court of Appeals reversed the trial courts decision and declared that the donation was valid. Furthermore, it held that petitioner lost her ownership of the property by prescription. Hence, the instant petition for review on the following issues: (1) whether or not the donation inter vivos is valid; and (2) whether or not petitioner lost ownership of the land by prescription. As a rule, our jurisdiction in cases brought from the Court of Appeals is limited to the review and revision of errors of law allegedly committed by the appellate court. This is because its findings of fact are deemed conclusive and we are not duty-bound to analyze and weigh all over again the evidence already considered in the proceedings below.9 The rule, however, admits of the following exceptions: (1) when the findings are grounded on speculation, surmises or conjectures;

(2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion in the appreciation of facts; (4) when the factual findings of the trial and appellate courts are conflicting; (5) when the Court of Appeals, in making its findings, has gone beyond the issues of the case and such findings are contrary to the admissions of both appellant and appellee; (6) when the judgment of the appellate court is premised on a misapprehension of facts or when it has failed to consider certain relevant facts which, if properly taken into account, will justify a different conclusion; (7) when the findings of fact are conclusions without citation of specific evidence upon which they are based; and (8) when findings of fact of the Court of Appeals are premised on the absence of evidence but are contradicted by the evidence on record.10 In the case at bar, the factual findings of the trial court and the Court of Appeals are conflicting; thus, we are constrained to review the findings of facts. The trial court found the donation of the land void because Fermina was not the owner thereof, considering that it was inherited by Sixto from his parents. Thus, the land was not part of the conjugal property of the spouses Sixto and Fermina Calicdan, because under the Spanish Civil Code, the law applicable when Sixto died in 1941, the surviving spouse had a right of usufruct only over the estate of the deceased spouse. Consequently, respondent, who derived his rights from Fermina, only acquired the right of usufruct as it was the only right which the latter could convey. After a review of the evidence on record, we find that the Court of Appeals ruling that the donation was valid was not supported by convincing proof. Respondent himself admitted during the cross examination that he had no personal knowledge of whether Sixto Calicdan in fact purchased the subject land from Felomino Bautista. Pertinent portions of his testimony read: Q. And Sixto Calicdan inherited this property from his parents? A. No, sir. Q. What do you mean by no? A. To my knowledge and information, Sixto Calicdan bought the property from his cousin, I think Flaviano or Felomino Bautista.

Q. So, in other words, you have no personal knowledge about how Sixto Calicdan acquired this property? A. I think it was by purchase. Q. According to information, so you have no actual personal knowledge how Sixto Calicadan acquired this property? A. Yes, because when the property was bought by my uncle, I was not yet born, so information only. Q. So when you were born, you came to know already that Sixto Calicdan is the owner of this property? A. Yes, thru the son of Felomino Bautista who is now, I think, in Baguio. Q. You have not seen any document to show that Sixto Calicdan purchased the property from one Felomino Bautista? A. None, sir.11 In People v. Guittap,12 we held that: Under Rule 130, Section 36 of the Rules of Court, a witness can testify only to those facts which he knows of his own personal knowledge, i.e., which are derived from his own perception; otherwise, such testimony would be hearsay. Hearsay evidence is defined as "evidence not of what the witness knows himself but of what he has heard from others." The hearsay rule bars the testimony of a witness who merely recites what someone else has told him, whether orally or in writing. In Sanvicente v. People, we held that when evidence is based on what was supposedly told the witness, the same is without any evidentiary weight for being patently hearsay. Familiar and fundamental is the rule that hearsay testimony is inadmissible as evidence. The Court of Appeals thus erred in ruling based on respondents bare hearsay testimony as evidence of the donation made by Fermina. Notwithstanding the invalidity of the donation, we find that respondent has become the rightful owner of the land by extraordinary acquisitive prescription. Prescription is another mode of acquiring ownership and other real rights over immovable property. It is concerned with lapse of time in the manner and under conditions laid down by law, namely, that the possession should be in the concept of an owner, public, peaceful, uninterrupted and adverse. Acquisitive prescription is either ordinary or extraordinary. Ordinary acquisitive prescription requires possession in good faith and with just title for ten years. In extraordinary prescription ownership and other

real rights over immovable property are acquired through uninterrupted adverse possession thereof for thirty years without need of title or of good faith. 13 The good faith of the possessor consists in the reasonable belief that the person from whom he received the thing was the owner thereof, and could transmit his ownership.14 For purposes of prescription, there is just title when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right.15 Assuming arguendo that ordinary acquisitive prescription is unavailing in the case at bar as it demands that the possession be "in good faith and with just title," 16 and there is no evidence on record to prove respondents "good faith", nevertheless, his adverse possession of the land for more than 45 years aptly shows that he has met the requirements for extraordinary acquisitive prescription to set in. The records show that the subject land is an unregistered land. When the petitioner filed the instant case on June 29, 1992, respondent was in possession of the land for 45 years counted from the time of the donation in 1947. This is more than the required 30 years of uninterrupted adverse possession without just title and good faith. Such possession was public, adverse and in the concept of an owner. Respondent fenced the land and built his house in 1949, with the help of Guadalupes father as his contractor. His act of cultivating and reaping the fruits of the land was manifest and visible to all. He declared the land for taxation purposes and religiously paid the realty taxes thereon.17 Together with his actual possession of the land, these tax declarations constitute strong evidence of ownership of the land occupied by him. As we said in the case of Heirs of Simplicio Santiago v. Heirs of Mariano Santiago:18 Although tax declarations or realty tax payment of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of owner, for no one in his right mind would be paying taxes for a property that is not in his actual or constructive possession. They constitute at least proof that the holder has a claim of title over the property. The voluntary declaration of a piece of property for taxation purposes manifests not only ones sincere and honest desire to obtain title to the property and announces his adverse claim against the State and all other interested parties, but also the intention to contribute needed revenues to the Government. Such an act strengthens ones bona fide claim of acquisition of ownership. Moreover, the deed of donation inter vivos, albeit void for having been executed by one who was not the owner of the property donated, may still be used to show the exclusive and adverse character of respondents possession. Thus, in Heirs of Segunda Maningding v. Court of Appeals,19 we held: Even assuming that the donation propter nuptias is void for failure to comply with formal requisites, it could still constitute a legal basis for adverse possession. With clear and convincing evidence of possession, a private document of donation may serve as basis

for a claim of ownership. In Pensader v. Pensader we ruled that while the verbal donation under which the defendant and his predecessors-in-interest have been in possession of the lands in question is not effective as a transfer of title, still it is a circumstance which may explain the adverse and exclusive character of the possession. (Underscoring ours) In sum, the Court of Appeals correctly ordered the dismissal of Civil Case No. D-10270 before the Regional Trial Court of Dagupan City, Branch 44, and declared respondent the rightful owner of the subject property, not on the basis of the Deed of Donation Inter Vivos, which is hereby declared void, but on extraordinary acquisitive prescription. WHEREFORE, in view of the foregoing, the petition is DENIED. The Decision of the Court of Appeals dated April 4, 2002 in CA-G.R. CV No. 67266, which ordered the dismissal of Civil Case No. D-10270 before the Regional Trial Court of Dagupan City, Branch 44, is AFFIRMED. SO ORDERED. Davide, Jr., C.J., (Chairman), Panganiban, and Carpio, JJ., concur. Azcuna, J., on official leave.

Article 760 G.R. No. L-58671 November 22, 1985 EDUVIGIS J. CRUZ, petitioner, vs. COURT OF APPEALS, ET AL., respondents.

PLANA, J.: This a petition for review of the decision of the defunct Court of Appeals dated August 20, 1981 in CA-G.R. No. 65338-H reversing that of the Court of First Instance of Rizal. and dismissing petitioner's complaint for revocation of donation against herein private respondents Teresita, Lydia and all surnamed De Leon. In Eduvigis J. Cruz, a childless widow, donated a 235.5 sq.m residential lot in San Isidro, Taytay Rizal together with the two-door apartment erected thereon to her grandnieces private respondents herein, in a deed of donation entitled "Kasulatan Sa Kaloobpala". The property was accordingly transferred to the names of private respondents.

In 1974, Eduvigis Cruz judicially adopted Cresencia Ocreto, a minor, after which she extrajudicially tried to revoke the donation, but the donees resisted, alleging that (a) the property in question was co-owned by Eduvigis Cruz and her brother. the late Maximo Cruz, grandfather of the donees, hence the latter own 1/2 of the property by inheritance; and (b) Eduvigis Cruz owns another property, an agricultural land of more than two hectares situated in Barrio Dolores, Taytay, Rizal, hence the donation did not impair the presumptive legitime of the adopted child. In 1975, petitioner filed a complaint against the donees for revocation of donation in the Court of First Instance of Rizal (Civil Case No. 21049) invoking Article 760, paragraph 3 of the New Civil Code, which reads: Art. 760, Ever donation inter vivos made by a person having no children or descendants, legitimate or legitimated by subsequent marriage, or illegitimate, may be revoked or reduced as provided in the next article, by the happening of any of these events: xxx xxx xxx (3) If the donor should subsequently adopt a minor child. After trial, the trial court rendered a decision revoking the donation. It did not find merit in defendants' claim that the lot, by donor and her deceased brother, Maximo Cruz, because the donor's ownership was deemed admitted by the donees by accepting the deed of donation. It also rejected defendants' argument that the donation did not impair the legitime, saying that claim was "beside the point" and did not limit plaintiff's right under Art. 760 of the Civil Code. On appeal, the Court of Appeals reversed the trial court and dismissed the complaint. It found that. a) the trial court took into consideration only Article 760 of the Civil Code and ignored Article 761 which states: " In the cases referred to in the preceding article, the donation shall be revoked or reduced insofar as it exceeds the portion that may be freely disposed of by will, taking into account the whole estate of the donor of by will, taking into account the whole estate of the donor at the time of the birth, appearance or adoption of a child. (b) Eduvigis Cruz owns another lot in Dolores Taytay Rizal, although the subject of a pending litigation valued at P273,420.00 in 1977. (c) The donated lot did not belong entirely to Eduvigis as thereof belonged to her brother Maximo Cruz, grandfather of defendants. 1974 it had a total market value of

P17,000. One-half thereof was P8,500. Adding thereto a P50,000 value of the apartment house constructed thereon, the total value of the donation would still be within the free portion of donor's estate and therefore would not impair the legitime of the adopted child. (d) In an action for revocation of donation, the donor has the burden to show that the donation has impaired the legitime of the subsequent child; but in this case, Eduvigis did not even allege it in her complaint. In the instant petition for review, petitioner imputes to the appellate court alleged errors which boil down to the question as to whether under the facts as established and the law, the decision under review correctly dismissed the complaint to annul the subject donation. We hold that it did. In the case of the subsequent adoption of a minor by one who had previously donated some or all of his properties to another, the donor may sue for the annulment or reduction of the donation within four years from the date of adoption, if the donation impairs the legitime of the adopted, taking into account the whole estate of the donor at the time of the adoption of the child. (Civil Code, Articles 760, 761 and 763). Of course, the burden of proof is on the plaintiff-donor, who must allege and establish the requirements prescribed by law, on the basis of which annulment or reduction of the donation can be adjudged. Unfortunately, in the case at bar, the complaint for annulment does not allege that the subject donation impairs the legitime of the adopted child. Indeed it contains no indication at all of the total assets of the donor. Nor is there proof of impairment of legitime. On the contrary, there is unrebutted evidence that the donor has another piece of land (27,342 sq. m.) situated in Dolores, Taytay, Rizal worth P273,420.00 in 1977, although then subject to litigation. The legal situation of petitioner-donor, as plaintiff, is made worse by the factual finding of the Court of Appeals that the grandfather of the donees was the owner pro indiviso of one-half of the donated land, the effect of which is to reduce the value of the donation which can then more easily be taken from the portion of the estate within the free disposal of petitioner. WHEREFORE, the decision under review is affirmed. SO ORDERED. Article 764 G.R. No. 140487 April 2, 2001

REPUBLIC OF THE PHILIPPINES, petitioner, vs. LEON SILIM and ILDEFONSA MANGUBAT, respondents. KAPUNAN, J.: Before the Court is a petition for review under Rule 45 seeking the reversal of the Decision of the Court of Appeals in CA-G.R. No. 43840, entitled Leon Silim, et al. vs. Wilfredo Palma, et al., which declared null and void the donation made by respondents of a parcel of land in favor of the Bureau of Public Schools, Municipality of Malangas, Zamboanga del Sur. The antecedents of this case are as follows: On 17 December 1971, respondents, the Spouses Leon Silim and Ildefonsa Mangubat, donated a 5,600 square meter parcel of land in favor of the Bureau of Public Schools, Municipality of Malangas, Zamboanga del Sur (BPS). In the Deed of Donation, respondents imposed the condition that the said property should "be used exclusively and forever for school purposes only."1 This donation was accepted by Gregorio Buendia, the District Supervisor of BPS, through an Affidavit of Acceptance and/or Confirmation of Donation. Through a fund raising campaign spearheaded by the Parent-Teachers Association of Barangay Kauswagan, a school building was constructed on the donated land. However, the Bagong Lipunan school building that was supposed to be allocated for the donated parcel of land in Barangay Kauswagan could not be released since the government required that it be built upon a one (1) hectare parcel of land. To remedy this predicament, Assistant School Division Superintendent of the Province of Zamboanga del Sur, Sabdani Hadjirol, authorized District Supervisor Buendia to officially transact for the exchange of the one-half (1/2) hectare old school site of Kauswagan Elementary School to a new and suitable location which would fit the specifications of the government. Pursuant to this, District Supervisor Buendia and Teresita Palma entered into a Deed of Exchange whereby the donated lot was exchanged with the bigger lot owned by the latter. Consequently, the Bagong Lipunan school buildings were constructed on the new school site and the school building previously erected on the donated lot was dismantled and transferred to the new location. When respondent Leon Silim saw, to his surprise, that Vice-Mayor Wilfredo Palma was constructing a house on the donated land, he asked the latter why he was building a house on the property he donated to BPS. Vice Mayor Wilfredo Palma replied that he is already the owner of the said property. Respondent Leon Silim endeavored to stop the construction of the house on the donated property but Vice-Mayor Wilfredo Palma advised him to just file a case in court.

On February 10, 1982, respondents filed a Complaint for Revocation and Cancellation of Conditional Donation, Annulment of Deed of Exchange and Recovery of Possession and Ownership of Real Property with damages against Vice Mayor Wilfredo Palma, Teresita Palma, District Supervisor Buendia and the BPS before the Regional Trial Court of Pagadian City, Branch 21. In its Decision dated 20 August 1993, the trial court dismissed the complaint for lack of merit.2 The pertinent portion of the decision reads: Thus, it is the considered view of this Court that there was no breach or violation of the condition imposed in the subject Deed of Donation by the donee. The exchange is proper since it is still for the exclusive use for school purposes and for the expansion and improvement of the school facilities within the community. The Deed of Exchange is but a continuity of the desired purpose of the donation made by plaintiff Leon Silim. In sum, it may be safely stated that the aforesaid transaction of exchange is a (sic) exception to the law invoked by the plaintiffs (Art. 764, Civil Code). The donee, being the State had the greater reciprocity of interest in the gratuitous and onerous contract of donation. It would be illogical and selfish for the donor to technically preclude the donee from expanding its school site and improvement of its school facilities, a paramount objective of the donee in promoting the general welfare and interests of the people of Barangay Kauswagan. But it is a well-settled rule that if the contract is onerous, such as the Deed of Donation in question, the doubt shall be settled in favor of the greatest reciprocity of interests, which in the instant case, is the donee. x x x

WHEREFORE, in view of all the foregoing, judgement is hereby rendered: 1. Dismissing the complaint for lack of merit; 2. Dismissing the counterclaim for the sake of harmony and reconciliation between the parties; 3. With costs against plaintiffs. SO ORDERED.3 Not satisfied with the decision of the trial court, respondents elevated the case to the Court of Appeals. In its Decision dated 22 October 1999, the Court of Appeals reversed the decision of the trial court and declared the donation null and void on the grounds that the donation was not properly accepted and the condition imposed on the donation was violated.4 Hence, the present case where petitioner raises the following issues:

I. WHETHER THE COURT OF APPEALS ERRED IN DECLARING THE DONATION NULL AND VOID DUE TO AN INVALID ACCEPTANCE BY THE DONEE. II. WHETHER THE COURT OF APPEALS ERRED IN DECLARING THE DONATION NULL AND VOID DUE TO AN ALLEGED VIOLATION OF A CONDITION IN THE DONATION.5 The Court gives DUE COURSE to the petition. Petitioner contends that the Court of Appeals erred in declaring the donation null and void for the reason that the acceptance was not allegedly done in accordance with Articles 7456 and 7497 of the New Civil Code. We agree. Donations, according to its purpose or cause, may be categorized as: (1) pure or simple; (2) remuneratory or compensatory; (3) conditional or modal; and (4) onerous. A pure or simple donation is one where the underlying cause is plain gratuity. 8 This is donation in its truest form. On the other hand, a remuneratory or compensatory donation is one made for the purpose of rewarding the donee for past services, which services do not amount to a demandable debt.9 A conditional or modal donation is one where the donation is made in consideration of future services or where the donor imposes certain conditions, limitations or charges upon the donee, the value of which is inferior than that of the donation given.10 Finally, an onerous donation is that which imposes upon the donee a reciprocal obligation or, to be more precise, this is the kind of donation made for a valuable consideration, the cost of which is equal to or more than the thing donated.11 Of all the foregoing classifications, donations of the onerous type are the most distinct. This is because, unlike the other forms of donation, the validity of and the rights and obligations of the parties involved in an onerous donation is completely governed not by the law on donations but by the law on contracts. In this regard, Article 733 of the New Civil Code provides: Art. 733. Donations with an onerous cause shall be governed by the rules on contracts, and remuneratory donations by the provisions of the present Title as regards that portion which exceeds the value of the burden imposed. The donation involved in the present controversy is one which is onerous since there is a burden imposed upon the donee to build a school on the donated property. 12 The Court of Appeals held that there was no valid acceptance of the donation because: x x x

Under the law the donation is void if there is no acceptance. The acceptance may either be in the same document as the deed of donation or in a separate public instrument. If the acceptance is in a separate instrument, "the donor shall be notified thereof in an authentic form, and his step shall be noted in both instruments. "Title to immovable property does not pass from the donor to the donee by virtue of a deed of donation until and unless it has been accepted in a public instrument and the donor duly noticed thereof. (Abellera vs. Balanag, 37 Phils. 85; Alejandro vs. Geraldez, 78 SCRA 245 ). If the acceptance does not appear in the same document, it must be made in another. Solemn words are not necessary; it is sufficient if it shows the intention to accept, But in this case, it is necessary that formal notice thereof be given to the donor and the fact that due notice has been given it must be noted in both instruments (that containing the offer to donate and that showing acceptance). Then and only then is the donation perfected. (11 Manresa 155-11, cited in Vol. II, Civil Code of the Philippines by Tolentino.)." This Court perused carefully the Deed of Donation marked as exhibit "A" and "1" to determine whether there was acceptance of the donation. This Court found none. We further examined the record if there is another document which embodies the acceptance, we found one. Although the Court found that in the offer of exhibits of the defendants, a supposed affidavit of acceptance and/or confirmation of the donation, marked as exhibit "8" appears to have been offered. However, there is nothing in the record that the exhibits offered by the defendants have been admitted nor such exhibits appear on record. Assuming that there was such an exhibit, the said supposed acceptance was not noted in the Deed of Donation as required under Art. 749 of the Civil Code. And according to Manresa, supra, a noted civilist, the notation is one of the requirements of perfecting a donation. In other words, without such a notation, the contract is not perfected contract. Since the donation is not perfected, the contract is therefore not valid.13 x x x

We hold that there was a valid acceptance of the donation. Sections 745 and 749 of the New Civil Code provide: ART. 745. The donee must accept the donation personally, or through an authorized person with a special power for the purpose, or with a general and sufficient power; otherwise the donation shall be void.

ART. 749. In order that the donation of an immovable may be laid, it must be made in a public document, specifying therein the property donated and the value of the charge which the donee must satisfy. The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor. If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments. Private respondents, as shown above, admit that in the offer of exhibits by the defendants in the trial court, an affidavit of acceptance and/or confirmation of the donation, marked as Exhibit "8," was offered in evidence. However, private respondents now question this exhibit because, according to them "there is nothing in the record that the exhibits offered by the defendants have been admitted nor such exhibit appear on record." Respondents' stance does not persuade. The written acceptance of the donation having been considered by the trial court in arriving at its decision, there is the presumption that this exhibit was properly offered and admitted by the court. Moreover, this issue was never raised in the Court of Appeals. Nowhere in their brief did respondents question the validity of the donation on the basis of the alleged defect in the acceptance thereof. If there was such a defect, why did it take respondents more than ten (10) years from the date of the donation to question its validity? In the very least, they are guilty of estoppel.14 Respondents further argue that assuming there was a valid acceptance of the donation, the acceptance was not noted in the Deed of Donation as required in Article 749 of the Civil Code, hence, the donation is void. The purpose of the formal requirement for acceptance of a donation is to ensure that such acceptance is duly communicated to the donor. Thus, in Pajarillo vs. Intermediate Appellate Court,15 the Court held: There is no question that the donation was accepted in a separate public instrument and that it was duly communicated to the donors. Even the petitioners cannot deny this. But what they do contend is that such acceptance was not "noted in both instruments," meaning the extrajudicial partition itself and the instrument of acceptance, as required by the Civil Code. That is perfectly true. There is nothing in either of the two instruments showing that "authentic notice" of the acceptance was made by Salud to Juana and Felipe. And while the first instrument contains the statement that "the donee does hereby accept this donation and does hereby express her gratitude for the

kindness and liberality of the donor," the only signatories thereof were Felipe Balane and Juana Balane de Suterio. That was in fact the reason for the separate instrument of acceptance signed by Salud a month later. A strict interpretation of Article 633 can lead to no other conclusion that the annulment of the donation for being defective in form as urged by the petitioners. This would be in keeping with the unmistakable language of the above-quoted provision. However, we find that under the circumstances of the present case, a literal adherence to the requirement of the law might result not in justice to the parties but conversely a distortion of their intentions. It is also a policy of the Court to avoid such as interpretation. The purpose of the formal requirement is to insure that the acceptance of the donation is duly communicated to the donor. In the case at bar, it is not even suggested that Juana was unaware of the acceptance for she in fact confirmed it later and requested that the donated land be not registered during her lifetime by Salud. Given this significant evidence, the Court cannot in conscience declare the donation ineffective because there is no notation in the extrajudicial settlement of the donee's acceptance. That would be placing too much stress on mere form over substance. It would also disregard the clear reality of the acceptance of the donation as manifested in the separate instrument dated June 20, 1946, and as later acknowledged by Juan. In the case at bar, a school building was immediately constructed after the donation was executed. Respondents had knowledge of the existence of the school building put up on the donated lot through the efforts of the Parents-Teachers Association of Barangay Kauswagan. It was when the school building was being dismantled and transferred to the new site and when Vice-Mayor Wilfredo Palma was constructing a house on the donated property that respondents came to know of the Deed of Exchange. The actual knowledge by respondents of the construction and existence of the school building fulfilled the legal requirement that the acceptance of the donation by the donee be communicated to the donor. On respondents' claim, which was upheld by the Court of Appeals, that the acceptance by BPS District Supervisor Gregorio Buendia of the donation was ineffective because of the absence of a special power of attorney from the Republic of the Philippines, it is undisputed that the donation was made in favor of the Bureau of Public Schools. Such being the case, his acceptance was authorized under Section 47 of the 1987 Administrative Code which states: SEC. 47. Contracts and Conveyances. - Contracts or conveyances may be executed for and in behalf of the Government or of any of its branches, subdivisions, agencies, or instrumentalities, whenever demanded by the exigency or exigencies of the service and as long as the same are not prohibited by law.

Finally, it is respondents' submission that the donee, in exchanging the donated lot with a bigger lot, violated the condition in the donation that the lot be exclusively used for school purposes only. What does the phrase "exclusively used for school purposes" convey? "School" is simply an institution or place of education.16 "Purpose" is defined as "that which one sets before him to accomplish or attain; an end, intention, or aim, object, plan, project. Term is synonymous with the ends sought, an object to be attained, an intention, etc."17"Exclusive" means "excluding or having power to exclude (as by preventing entrance or debarring from possession, participation, or use); limiting or limited to possession, control or use.18 Without the slightest doubt, the condition for the donation was not in any way violated when the lot donated was exchanged with another one. The purpose for the donation remains the same, which is for the establishment of a school. The exclusivity of the purpose was not altered or affected. In fact, the exchange of the lot for a much bigger one was in furtherance and enhancement of the purpose of the donation. The acquisition of the bigger lot paved the way for the release of funds for the construction of Bagong Lipunan school building which could not be accommodated by the limited area of the donated lot. WHEREFORE, the decision of the Court of Appeals is hereby REVERSED and SET ASIDE and the decision of the Regional Trial Court is REINSTATED. SO ORDERED. Article 765 G.R. No. 105944 February 9, 1996

SPOUSES ROMULO AND SALLY EDUARTE, petitioners, vs. THE HONORABLE COURT OF APPEALS and PEDRO CALAPINE (substituted by ALEXANDER CALAPINE and ARTEMIS CALAPINE), respondents. DECISION FRANCISCO, J.: A donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it.1 On the part of the donor, it is an exercise of one's generosity. However, on several occasions, instead of being accorded recognition and appreciation for this act of beneficence, the donor ends up as a victim of greed and ingratitude. This was the fate that befell Pedro Calapine (herein original plaintiff) constraining him to cause the revocation of the donation that he made to his niece in 1984. The instant petition for certiorari is interposed by the spouses Romulo and Sally

Eduarte, assailing the decision of the Court of Appeals in CA-G.R. CV No. 29175 which affirmed the revocation of the donation made by Pedro Calapine to his niece, Helen Doria, and at the same time declared petitioners as purchasers in bad faith of the property donated. As set out in the appealed decision, the undisputed facts are as follows: Pedro Calapine was the registered owner of a parcel of land located in San Cristobal, San Pablo City, with an area of 12,199 square meters, as evidenced by Original Certificate of Title No. P-2129 (Exhibits A and 1). On April 26, 1984, he executed a deed entitled "Pagbibigay-Pala (Donacion InterVivos)" ceding onehalf portion thereof to his niece Helen S. Doria (Exhibit B). On July 26, 1984, another deed identically entitled was purportedly executed by Pedro Calapine ceding unto Helen S. Doria the whole of the parcel of land covered by OCT No. P-2129 (Exhibits C and D), on the basis of which said original certificate was cancelled and in lieu thereof Transfer Certificate of Title No. T-23205 was issued in her name, (Exhibits G and 2). On February 26, 1986, Helen S. Doria donated a portion of 157 square meters of the parcel of land covered by TCT No. T-23205 to the Calauan Christian Reformed Church, Inc. (Exhibit H), on the basis of which said transfer certificate of title was cancelled and TCT No. T-24444 was issued in its name covering 157 square meters (Exhibit 2-A) and TCT No. T-24445, in the name of Helen S. Doria covering the remaining portion of 12,042 square meters (Exhibit 3). On March 25, 1988, Helen S. Doria sold, transferred and conveyed unto the spouses Romulo and Sally Eduarte the parcel of land covered by TCT No. T24445, save the portion of 700 square meters on which the vendor's house had been erected (Exhibits 1 and 3-F), on the basis of which TCT No. 24445 was cancelled and in lieu thereof TCT No. T-27434, issued in the name of the vendees (Exhibit 4). Claiming that his signature to the deed of donation (Exhibits C and D) was a forgery and that she was unworthy of his liberality, Pedro Calapine brought suit against Helen S. Doria, the Calauan Christian Reformed Church, Inc. and the Spouses Romulo and Sally Eduarte to revoke the donation made in favor of Helen S. Doria (Exhibit B), to declare null and void the deeds of donation and sale that she had executed in favor of the Calauan Christian Reformed Church, Inc. and the spouses Romulo and Sally Eduarte (Exhibits H, I and 3-F) and to cancel TCT Nos. T-24444, 24445 and T-27434. Answering the complaint, the defendants spouses denied knowledge of the first deed of donation and alleged that after a part of the property was donated to the defendant Calauan Christian Reformed Church, Inc., the remaining portion thereof was sold to them by the defendant Helen S. Doria; and that the plaintiff's

purported signature in the second deed of donation was his own, hence genuine. They prayed that the complaint against them be dismissed; that upon their counterclaim, the plaintiff be ordered to pay them moral and exemplary damages and attorney's fees; and that upon their cross-claim the defendant Helen S. Doria be ordered to reimburse them the purchase price of P110,000 and to pay them moral and exemplary damages and attorney's fees (pp. 23-31, rec.). The defendant Calauan Christian Reformed Church, Inc. manifested in its answer the willingness to reconvey to the plaintiff that part of the property donated to it by Helen S. Doria (pp. 36-38, rec.). And having executed the corresponding deed of reconveyance, the case as against it was dismissed (pp. 81-83; 84, rec.). The defendants Helen S. Doria and the City Assessor and the Registrar of Deeds of San Pablo City did not file answers to the plaintiffs complaint. After the plaintiffs death on August 27, 1989, on motion he was substituted by his nephews Alexander and Artemis Calapine upon order of the Court (pp. 147-152; 250, rec.) After trial, the Regional Trial Court, Fourth Judicial Region, Branch 30, San Pablo City rendered judgment, the dispositive part of which provides: WHEREFORE, premises considered, judgment is hereby rendered by the Court in the instant case in favor of plaintiff and against defendant Eduartes to wit: 1. DECLARING as it is hereby declared, the revocation of the Deed of Donation dated April 26, 1984; 2. ANNULLING, voiding, setting aside and declaring of no force and effect the Deed of Donation dated July 26, 1984, the deed of absolute sale executed on March 25, 1988 by and between spouses Eduartes and Helen Doria, and the Transfer Certificate of Title No. T-27434 issued under the name of spouses Romulo and Sally Eduarte; 3. ORDERING the office of the Register of Deeds, San Pablo City, to cancel TCT No. T-27434 or any other adverse title emanating from OCT No. P-2129 and in lieu thereof, to issue a new transfer certificate of title covering the subject property under the names of the substitute-plaintiffs Alexander and Artemis both surnamed Calapine, after payment of the corresponding fees and taxes therefor; and 4. ORDERING defendant Helen Doria to pay substitute-plaintiffs the sum of P20,000.00 as and for attorney's fees.

Judgment on the cross-claim of defendant Eduartes against Helen Doria is further rendered by ordering the latter to pay the former the sum of P110,000.00 with legal interest thereon starting from March 25, 1988 until full payment, and the further sum of P20,000.00 as and for attorney's fees. The counterclaim of defendant Eduartes against plaintiff is hereby dismissed for lack of merit. Costs against defendant Helen Doria in both the complaint and the crossclaim (pp. 11-12, decision, pp. 264-265, rec.). Only the defendants Eduarte spouses took an appeal (p. 266, rec.), claiming that the trial court erred 1. In annulling, voiding, setting aside, and declaring of no force and effect (a) the deed of donation (Exhibit C and 1-A), dated July 26, 1984; (b) the deed of absolute sale (Exhibit 1 and 3-E) executed on March 25, 1988 by and between Spouses Eduartes and Helen Doria; (c) TCT No. T-27434 (Exhibit 4) issued in the name of spouses Romulo Eduarte and Sally Eduarte; and in revoking the deed of donation (Exhibit B) dated April 26, 1984; 2. In declaring the appellants Eduartes buyers in bad faith; 3. In not finding the plaintiffs guilty of estoppel by silence and/or guilty of suppression of evidence instead of finding the appellants Eduartes guilty of suppression of evidence; and 4. In finding that the signature of Pedro Calapine in the deed of donation (Exhibits C and 1-A) dated July 26, 1984 a forgery based on the opposite findings of the handwriting experts presented by each party and in the absence of the testimony of Pedro Calapine who was then still alive. (pp. 1-2, appellants' brief.)2 In its decision dated April 22, 1992,3 respondent Court of Appeals dismissed petitioners' appeal and affirmed the decision of the trial court. Respondent court was in complete accord with the trial court in giving more credence to the testimony of private respondents' expert witness, NBI document examiner Bienvenido Albacea, who found Pedro Calapine's signature in the second deed of donation to be a forgery. It also ruled that by falsifying Pedro Calapine's signature, Helen Doria committed an act of ingratitude which is a valid ground for revocation of the donation made in her favor in

accordance with Article 765 of the Civil Code. Furthermore, respondent court upheld the trial court's finding that petitioners are not buyers in good faith of the donated property as they failed to exercise due diligence in verifying the true ownership of the property despite the existence of circumstances that should have aroused their suspicions. Petitioners are now before us taking exception to the foregoing findings of respondent Court of Appeals and contending that the same are not in accord with the law and evidence on record. Anent the revocation of the first deed of donation, petitioners submit that paragraph (1) of Article 765 of the Civil Code does not apply in this case because the acts of ingratitude referred to therein pertain to offenses committed by the donee against the person or property of the donor. Petitioners argue that as the offense imputed to herein donee Helen Doria - falsification of a public document - is neither a crime against the person nor property of the donor but is a crime against public interest under the Revised Penal Code, the same is not a ground for revocation. In support of this contention, petitioners cite the following portions found in Tolentino's Commentaries and Jurisprudence on the Civil Code: Offense against Donor - . . . The crimes against the person of the donor would include not only homicide and physical injuries, but also illegal detention, threats and coercion; and those against honor include offenses against chastity and those against the property, include robbery, theft, usurpation, swindling, arson, damages, etc. (5 Manresa 175-176).4 This assertion, however, deserves scant consideration. The full text of the very same commentary cited by petitioners belies their claim that falsification of the deed of donation is not an act of ingratitude, to wit: Offense Against Donor. - All crimes which offend the donor show ingratitude and are causes for revocation. There is no doubt, therefore, that the donee who commits adultery with the wife of the donor, gives cause for revocation by reason of ingratitude. The crimes against the person of the donor would include not only homicide and physical injuries, but also illegal detention, threats, and coercion; those against honor include offenses against chastity; and those against the property, include robbery, theft, usurpation, swindling, arson, damages, etc. [Manresa 175-176].5 (Emphasis supplied). Obviously, the first sentence was deleted by petitioners because it totally controverts their contention. As noted in the aforecited opinion "all crimes which offend the donor show ingratitude and are causes for revocation." Petitioners' attempt to categorize the offenses according to their classification under the Revised Penal Code is therefore unwarranted considering that illegal detention, threats and coercion are considered as crimes against the person of the donor despite the fact that they are classified as crimes against personal liberty and security under the Revised Penal Code.6

Petitioners also impute grave error to respondent Court of Appeals in finding that "the second deed of donation dated July 26, 1984 was falsified. Petitioners deplore the fact that more credence was given to the testimony of the NBI handwriting expert who found Pedro Calapine's signature in the second deed of donation to be a forgery despite the existence of controverting testimony by PC-INP Crime Laboratory (PCCL) Chief Document Examiner which petitioners adduced as evidence on their part. We are not persuaded. Respondent Court of Appeals and the trial court cannot be faulted for giving more weight and credence to the testimony of the NBI handwriting expert considering that the examination of the said witness proved to be complete, thorough and scientific. In gauging the relative weight to be given to the opinion of handwriting experts, we adhere to the following standards: We have held that the value of the opinion of a handwriting expert depends not upon his mere statements of whether a writing is genuine or false, but upon the assistance he may afford in pointing out distinguishing marks, characteristics and discrepancies in and between genuine and false specimens of writing which would ordinarily escape notice or detection from an unpracticed observer. The test of genuineness ought to be the resemblance, not the formation of letters in some other specimens but to the general character of writing, which is impressed on it as the involuntary and unconscious result of constitution, habit or other permanent course, and is, therefore itself permanent. 7 Confronted with contradicting testimonies from two handwriting experts, the trial court and respondent Court of Appeals were convinced by the opinion of the NBI handwriting expert as it was more exhaustive, in contrast with the testimony of petitioners' witness from the PCCL which was discarded on account of the following flaws: The Court is not convinced with Cruz's explanations. Apart from the visual inconsistencies, i.e., the strokes with which some letters were made, the variety in the sizes of the letters, the depth, the difference in the slant which the Court itself observed in its own examination of both the questioned signatures and those standard specimen signatures, there is evidence showing that Cruz did not make a thorough examination of all the signatures involved in this particular issue. Thus even in the report submitted by the PCCL it was admitted that they omitted or overlooked the examination of at least three (3) standard specimen signatures of Pedro Calapine which were previously subject of the NBI examination marked as Exhibits "S-9", "S-10" and "S-11". When questioned regarding this oversight, Cruz testified that in his opinion, the inclusion or noninclusion of said exhibits in their examination will not affect the same and they would have arrived at the same conclusion anyway. Again, when asked why they did not bother to have the original copies of the documents being questioned (Exhs. "Q-1" through "Q-3") for their examination, Cruz replied that they are using

a special film so it will not matter whether the documents being examined are the original or a mere photocopy (TSN 8, 10, 12 and 26, Hearing of Nov. 23, 1989). The Court will not attempt to make its own conclusion or resolution on such a technical issue as the matter at hand in the light of the cavalier attitude of Cruz. In fine, between the examinations made by the two witnesses, that of Albacea's proved to be complete, thorough and scientific and is worthy of credence and belief.8 The afore-quoted findings confirm beyond doubt the failure of petitioners' expert witness to satisfy the above-mentioned criteria for evaluating the opinion of handwriting experts. At the same time, petitioners' witness failed to rebut the convincing testimony of the NBI handwriting expert presented by private respondents. We therefore find no reason to deviate from the assailed conclusions as the same are amply supported by the evidence on record. Finally, proceeding to the crucial issue that directly affects herein petitioners, it is reiterated that petitioners are buyers in good faith of the donated property, and therefore, it was grave error to annul and set aside the deed of sale executed between petitioners and donee Helen Doria. In adjudging petitioners as buyers in bad faith, respondent Court of Appeals affirmed the trial court's finding that the attendant circumstances, that is, the presence of other occupants as well as houses built of strong materials and fruit bearing trees in the subject land, should have aroused the suspicion of petitioners and impelled them to exercise due diligence in verifying the true ownership of the property being sold. Petitioners dispute the lower court's conclusion and argue that although there were other occupants in the subject property, no adverse claim was made by the latter as they were mere tenants therein, thus, petitioners were not obliged to make any further inquiry because the property being sold was covered by a certificate of title under Helen Doria's name. We agree with petitioners. The rule is well-settled that mere possession cannot defeat the title of a holder of a registered torrens title to real property.9 Moreover, reliance on the doctrine that a forged deed can legally be the root of a valid title is squarely in point in this case: Although generally a forged or fraudulent deed is a nullity and conveys no title, however there are instances when such a fraudulent document may become the root of a valid title. One such instance is where the certificate of title was already transferred from the name of the true owner to the forger, and while it remained that way, the land was subsequently sold to an innocent purchaser. For then, the vendee had the right to rely upon what appeared in the certificate. Where there was nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not

required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. If the rule were otherwise, the efficacy and conclusiveness of the certificate of title which the Torrens System seeks to insure would entirely be futile and nugatory.10 When herein petitioners purchased the subject property from Helen Doria, the same was already covered by TCT No. T-23205 under the latter's name. And although Helen Doria's title was fraudulently secured, such fact cannot prejudice the rights of herein petitioners absent any showing that they had any knowledge or participation in such irregularity. Thus, they cannot be obliged to look beyond the certificate of title which appeared to be valid on its fade and sans any annotation or notice of private respondents' adverse claim. Contrary therefore to the conclusion of respondent Court, petitioners are purchasers in good faith and for value as they bought the disputed property without notice that some other person has a right or interest in such property, and paid a full price for the same at the time of the purchase or before they had notice of the claim or interest of some other person in the property.11 Respondent Court therefore committed a reversible error when it affirmed the ruling of the trial court annulling and setting aside the deed of absolute sale dated March 25, 1988 between petitioners and Helen Doria, as well as the Transfer Certificate of Title No. T-27434 issued under petitioners' name, the established rule being that the rights of an innocent purchaser for value must be respected and protected notwithstanding the fraud employed by the seller in securing his title.12 In this regard, it has been held that the proper recourse of the true owner of the property who was prejudiced and fraudulently dispossessed of the same is to bring an action for damages against those who caused or employed the fraud, and if the latter are insolvent, an action against the Treasurer of the Philippines may be filed for recovery of damages against the Assurance Fund.13 Conformably with the foregoing, having established beyond doubt that Helen Doria fraudulently secured her title over the disputed property which she subsequently sold to petitioners, Helen Doria should instead be adjudged liable to private respondents, and not to petitioners as declared by the trial court and respondent Court of Appeals, for the resulting damages to the true owner and original plaintiff, Pedro Calapine. ACCORDINGLY, the petition is GRANTED and the appealed decision is hereby MODIFIED. The portions of the decision of the Regional Trial Court of San Pablo City, Branch 30, as affirmed by the Court of Appeals in CA-G.R. CV No. 29175 which ordered the following: xxx xxx xxx

2. ANNULLING, voiding, setting aside and declaring of no force and effect . . . , the deed of absolute sale executed on March 25, 1988 by and between spouses

Eduartes and Helen Doria, and the Transfer Certificate of Title No T-27434 issued under the name of spouses Romulo and Sally Eduarte; 3. ORDERING the office of the Register of Deeds, San Pablo City, to cancel TCT No. T-27434 or any other adverse title emanating from OCT No. P-2129 and in lieu thereof, to issue a new transfer certificate of title covering the subject property under the names of the substitute-plaintiff Alexander and Artemis both surnamed Calapine, after payment of the corresponding fees and taxes therefor; and xxx xxx xxx

Judgment on the cross-claim of defendant Eduartes against Helen Doria is further rendered by ordering the latter to pay the former the sum of P110,000.00 with legal interest thereon starting from March 25, 1988 until full payment, . . . . are hereby REVERSED and SET ASIDE. Instead, Helen Doria is hereby ordered to pay herein private respondents the sum of P110,000.00 with legal interest counted from March 25, 1988 until full payment, as damages for the resulting loss to original plaintiff Pedro Calapine. In all other respects, the appealed decision is hereby affirmed. SO ORDERED. Narvasa, C.J., Davide, Jr., Melo and Panganiban, JJ., concur.