18 SUPREME COURT REPORTS ANNOTATEDLagazo vs. Court of Appeals

G.R. No. 112796. March 5, 1998.*

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

Civil Law Donations Simple or pure and onerous donationsdistinguished.A simple or pure donation is one whose cause ispure liberality (no strings attached), while an onerous donation isone which is subject to burdens, charges or future services equalto or more in value than the thing donated. Under Article 733 ofthe Civil Code, donations with an onerous cause shall be governedby the rules on contracts hence, the formalities required for avalid simple donation are not applicable.

Same Same Court rules that the donation was simple, notonerous.We rule that the donation was simple, not onerous.Even conceding that petitioners full payment of the purchaseprice of the lot might have been a burden to him, such paymentwas not however imposed by the donor as a condition for thedonation.

Same Same Acceptance of the donation by the donee isindispensable, its absence makes the donation null and void.Inthe words of the esteemed Mr. Justice Jose C. Vitug, Like anyother contract, an agreement of the parties is essential. Thedonation, following the theory of cognition (Article 1319, CivilCode), is perfected only upon the moment the donor knows of theacceptance by the donee. Furthermore, [i]f the acceptance ismade in a separate instrument, the donor shall be notified thereofin an authentic form,

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* FIRST DIVISION.

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Lagazo vs. Court of Appeals

and this step shall be noted in both instruments. Acceptance ofthe donation by the donee is, therefore, indispensable its absencemakes the donation null and void.

PETITION for review on certiorari of a decision of theCourt of Appeals.

The facts are stated in the opinion of the Court.Domingo G. Foronda for petitioner.Puno and Puno for private respondent.

PANGANIBAN, J.:

Where the acceptance of a donation was made in a separateinstrument but not formally communicated to the donor,may the donation be nonetheless considered complete, validand subsisting? Where the deed of donation did notexpressly impose any burdenthe expressed considerationbeing purely one of liberality and generositybut therecipient actually paid charges imposed on the propertylike land taxes and installment arrearages, may thedonation be deemed onerous and thus governed by the lawon ordinary contracts?

The Case

The Court answers these questions in the negative as itresolves this petition for review under Rule 45 of the Rulesof Court seeking to set aside the Decision

1 of the Court of

Appeals2 in CAGR CV No. 38050 promulgated on

November 29, 1993. The assailed Decision reversed theRegional Trial Court, Branch 30, Manila, in Civil Case No.8739133 which

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1 Rollo, pp. 2126.2 First Division, composed of JJ. Santiago M. Kapunan, chairman and

ponente (now an associate justice of the Supreme Court) Minerva P.GonzagaReyes and Eduardo G. Montenegro, members, concurring.

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20 SUPREME COURT REPORTS ANNOTATED

1.

2.

3.

Lagazo vs. Court of Appeals

had disposed3 of the controversy in favor of herein

petitioner in the following manner:4

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

Ordering the defendant, or any person claiming rightsunder him, to surrender to plaintiff possession of thepremises known as Lot 8w, Block 6, Psd135534 of theMonserrat Estate, and the improvement standing thereon,located at 3320 2nd St., V. Mapa, Old Sta. Mesa, ManilaOrdering the defendant to pay plaintiff the sum of FiveThousand (P5,000.00) Pesos, as and for attorneys feesandCosts against the defendant. The defendants counterclaims are hereby dismissed.

The Facts

Although the legal conclusions and dispositions of the trialand the appellate courts are conflicting, the factualantecedents of the case are not substantially disputed.

5 We

reproduce their narration from the assailed Decision:

Civil Case No. 8339133 involves an action filed byplaintiffappellee [herein petitioner] on January 22, 1987 seekingto recover from defendantappellant [a] parcel of land which theformer claims to have acquired from his grandmother bydonation. Defendantappellant [herein private respondent], on theother hand, put up the defense that when the alleged donationwas executed, he had already acquired the property by a Deed ofAssignment from a transferee of plaintiffappellees grandmother.

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3 Penned by Judge Jesus O. Ibay.4 RTC Decision, p. 4 rollo, p. 49.5 Private respondent, in his Comment to the Petition, set forth his

CounterStatement of the Facts supposedly contrary to the Statementof Facts and of the case as set forth in the Petition for Review. ThePetition, however, simply quoted from the appealed Decision whichsubstantially incorporated the version and defenses of private respondent.

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Lagazo vs. Court of Appeals

The evidence for plaintiffappellee [herein petitioner] issummarized as follows:

Catalina Jacob Vda. de Reyes, a widow and grandmother ofplaintiffappellee, was awarded in July 1975 a 60.10square meterlot which is a portion of the Monserrat Estate, more particularlydescribed as Lot 8W, Block 6 of Psd135834, located at 3320 2ndSt., V. Mapa, Old Sta. Mesa, Manila. The Monserrat Estate is apublic land owned by the City of Manila and distributed for saleto bona fide tenants under its landforthelandless program.Catalina Jacob constructed a house on the lot.

On October 3, 1977, or shortly before she left for Canada whereshe is now a permanent resident, Catalina Jacob executed aspecial power of attorney (Exh. A) in favor of her soninlawEduardo B. Espaol authorizing him to execute all documentsnecessary for the final adjudication of her claim as awardee of thelot.

Due to the failure of Eduardo B. Espaol to accomplish thepurpose of the power of attorney granted to him, Catalina Jacobrevoked said authority in an instrument executed in Canada onApril 16, 1984 (Exh. D). Simultaneous with the revocation,Catalina Jacob executed another power of attorney of the sametenor in favor of plaintiffappellee.

On January 30, 1985, Catalina Jacob executed in Canada aDeed of Donation over a Lot 8W in favor of plaintiffappellee (Exh.E). Following the donation, plaintiffappellee checked with theRegister of Deeds and found out that the property was in thedelinquent list, so that he paid the installments in arrears andthe remaining balance on the lot (Exhs. F, F1 and F2) anddeclared the said property in the name of Catalina Jacob (Exhs.G, G1, G2 and G3).

On January 29, 1986, plaintiffappellee sent a demand letter todefendantappellant asking him to vacate the premises (Exh. H).A similar letter was sent by plaintiffappellees counsel todefendant on September 11, 1986 (Exh. I). However, defendantappellant refused to vacate the premises claiming ownershipthereof. Hence, plaintiffappellee instituted the complaint forrecovery of possession and damages against defendantappellant.

Opposing plaintiffappellees version, defendantappellantclaimed that the house and lot in controversy were his by virtue ofthe following documents:

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22 SUPREME COURT REPORTS ANNOTATEDLagazo vs. Court of Appeals

1.

2.

3.

Deed of Absolute Sale executed by Catalina Jacobdated October 7, 1977 in favor of Eduardo B.Espaol covering the residential house located atthe premises (Exh. 4)Deed of Assignment over Lot 8W executed byCatalina Jacob in favor of Eduardo Espaol datedSeptember 30, 1980 (Exh. 5) andDeed of Assignment executed by Eduardo B.Espaol over Lot 8W and a residential housethereon in favor of defendantappellant datedOctober 2, 1982 (Exh. 6). After trial, the lower court decided in favor ofplaintiffappellee and against defendantappellant,rationalizing that the version of the former is morecredible than that of the latter. According to thelower court:

From the oral and documentary evidence adduced by the parties[,] itappears that the plaintiff has a better right over the property, subjectmatter of the case. The version of the plaintiff is more credible than thatof the defendant. The theory of the plaintiff is that the house and lotbelong to him by virtue of the Deed of Donation in his favor executed byhis grandmother Mrs. Jacob Vda. de Reyes, the real awardee of the lot inquestion. The defendants theory is that he is the owner thereof becausehe bought the house and lot from Eduardo Espaol, after the latter hadshown and given to him Exhibits 1, 4 and 5. He admitted that he signedthe 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 acknowledgment in Exhibit 5 shows that theassignor/awardee did not appear before the notary public. It may benoted that on said date, the original awardee of the lot was no longer inthe Philippines, as both parties admitted that she had not come back tothe Philippines since 1977. (Exhs. K, K1). Defendant, claiming to be theowner of the lot, unbelievably did not take any action to have the saidhouse and lot be registered or had them declared in his own name. Evenhis Exhibit 7 was not mailed or served to the addressee. Such attitudeand laxity is very unnatural for a buyer/owner of a property, in starkcontrast of [sic] the interest shown by the plaintiff who saw to it that thelot was removed from the de

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linquent list for nonpayment of installments and taxes due thereto [sic].

6

[I.]

[II.]

Ruling of the Appellate Court

In reversing the trial courts decision,7 Respondent Court of

Appeals anchored its ruling upon the absence of anyshowing that petitioner accepted his grandmothersdonation of the subject land. Citing jurisprudence that thedonees failure to accept a donation whether in the samedeed of donation or in a separate instrument renders thedonation null and void, Respondent Court deniedpetitioners claim of ownership over the disputed land. Theappellate court also struck down petitioners contentionthat the formalities for a donation of real property shouldnot apply to his case since it was an onerous onehe paidfor the amortizations due on the land before and after theexecution of the deed of donationreasoning that the deedshowed no burden, charge or condition imposed upon thedonee thus, the payments made by petitioner were hisvoluntary acts.

Dissatisfied with the foregoing ruling, petitioner nowseeks a favorable disposition from this Court.

8

Issues

Petitioner anchors his petition on the following grounds:9

In reversing the decision of the trial court, theCourt of Appeals decided a question of substance ina way not in accord with the law and applicabledecisions of this Honorable Court.Even granting the correctness of the decision of theCourt of Appeals, certain fact and circumstancestranspired in the

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6 CA Decision, pp. 13 rollo, pp. 2123.7 Rollo, pp. 4649.8 This case was deemed submitted for resolution upon receipt by this

Court of petitioners memorandum on April 29, 1996.9 Petition, pp. 67 rollo, pp. 1112.

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24 SUPREME COURT REPORTS ANNOTATEDLagazo vs. Court of Appeals

meantime which would render said decision manifestlyunjust, unfair and inequitable to petitioner.

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

The Courts Ruling

The petition lacks merit.

Main Issue: Simple or Onerous Donation?

At the outset, let us differentiate between a simpledonation and an onerous one. A simple or pure donation isone whose cause is pure liberality (no strings attached),while an onerous donation is one which is subject toburdens, charges or future services equal to or more invalue than the thing donated.

10 Under Article 733 of the

Civil Code, donations with an onerous cause shall begoverned by the rules on contracts hence, the formalitiesrequired for a valid simple donation are not applicable.

Petitioner contends that the burdens, charges orconditions imposed upon a donation need not be stated onthe deed of donation itself. Thus, although the deed did notcategorically impose any charge, burden or condition to besatisfied by him, the donation was onerous since he in factand in reality paid for the installments in arrears and forthe remaining balance of the lot in question. Being anonerous donation, his acceptance thereof may be express orimplied, as provided under Art. 1320 of the Civil Code, andneed not comply with the formalities required by Art. 749of the same code. His payment of the arrearages andbalance and his assertion of his

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10 De Luna vs. Abrigo, 181 SCRA 150, 15556, January 18, 1990, citingEdgardo L. Paras, Civil Code of the Philippines Annotated, 11th ed., Vol.II, p. 726.

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right of possession against private respondent clearlyindicate his acceptance of the donation.

We rule that the donation was simple, not onerous. Evenconceding that petitioners full payment of the purchaseprice of the lot might have been a burden to him, suchpayment was not however imposed by the donor as acondition for the donation. Rather, the deed explicitlystated:

That for and in consideration of the love and affection which theDONEE inspires in the DONOR, and as an act of liberality andgenerosity and considering further that the DONEE is a grandsonof the DONOR, the DONOR hereby voluntarily and freely gives,transfer[s] and conveys, by way of donation unto said DONEE, hisheirs, executors, administrators and assigns, all the right, titleand interest which the said DONOR has in the above describedreal property, together with all the buildings and improvementsfound therein, free from all lines [sic] and encumbrances andcharges whatsoever

11

[italics supplied]

It is clear that the donor did not have any intention toburden or charge petitioner as the donee. The words in thedeed are in fact typical of a pure donation. We agree withRespondent Court that the payments made by petitionerwere merely his voluntary acts. This much can be gatheredfrom his testimony in court, in which he never evenclaimed that a burden or charge had been imposed by hisgrandmother.

ATTY. FORONDA:q After you have received this [sic] documents, the x x x

revocation of power of attorney and the Special Power ofAttorney 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.

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11 Exh. E rollo, p. 106.

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26 SUPREME COURT REPORTS ANNOTATEDLagazo vs. Court of Appeals

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 lotwas includ[ed] in the dilinquent [sic] list?

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

ATTY. FORONDA:q And what was the answer [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 totake [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 tothe power of attorney

13 executed by Catalina Reyes in favor

of petitioner, her grandson, authorizing him to execute actsnecessary for the fulfillment of her obligations. Nothing inthe records shows that such acts were meant to be aburden in the donation.

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12 TSN, August 2, 1988, pp. 1719.13 Records, p. 10 rollo, p. 102.

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VOL. 287, MARCH 5, 1998 27Lagazo vs. Court of Appeals

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

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

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

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

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

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

In the words of the esteemed Mr. Justice Jose C. Vitug,14

Like any other contract, an agreement of the parties isessential. The donation, following the theory of cognition(Article 1319, Civil Code), is perfected only upon themoment the donor knows of the acceptance by the donee.Furthermore, [i]f the acceptance is made in a separateinstrument, the donor shall be notified thereof in anauthentic form, and this step shall be noted in bothinstruments.

15

Acceptance of the donation by the donee is, therefore,indispensable its absence makes the donation null andvoid.

16 The perfection and the validity of a donation are well

explained by former Sen. Arturo M. Tolentino in this wise:

x x x Title to immovable property does not pass from the donor tothe donee by virtue of a deed of donation until and unless it has

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14 In his Compendium of Civil Law and Jurisprudence, 1993 revised ed., p. 349.15 Ibid., p. 353, citing Legasto vs. Verzosa, 54 Phil. 766, March 31, 1930.16 Pea vs. Court of Appeals, 193 SCRA 717, 731, February 7, 1991.

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28 SUPREME COURT REPORTS ANNOTATEDLagazo vs. Court of Appeals

been accepted in a public instrument and the donor duly notifiedthereof. The acceptance may be made in the very sameinstrument of donation. If the acceptance does not appear in thesame document, it must be made in another. Solemn words arenot necessary it is sufficient if it shows the intention to accept.But in this case it is necessary that formal notice thereof be givento the donor, and the fact that due notice has been given must benoted in both instruments (that containing the offer to donate andthat showing the acceptance). Then and only then is the donationperfected. If the instrument of donation has been recorded in theregistry of property, the instrument that shows the acceptanceshould also be recorded. Where the deed of donation fails to showthe acceptance, or where the formal notice of the acceptance,made in a separate instrument, is either not given to the donor orelse not noted in the deed of donation and in the separateacceptance, the donation is null and void.

17

Exhibit E (the deed of donation) does not show anyindication that petitionerdonee accepted the gift. Duringthe trial, he did not present any instrument evidencingsuch acceptance despite the fact that private respondentalready raised this allegation in his supplementalpleading

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 submittedan affidavit

19 dated August 28, 1990, manifesting that he

wholeheartedly accepted the lot given to him by hisgrandmother, Catalina Reyes. This is too late, becausearguments, evidence, causes of action and matters notraised in the trial court may no longer be raised onappeal.

20

True, the acceptance of a donation may be made at anytime during the lifetime of the donor. And grantingarguendo that such acceptance may still be admitted inevidence on

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17 Tolentino, Civil Code of the Philippines, 1992 ed., Vol. II, pp. 557558(citations omitted).

18 Records, pp. 6264.19 Annex D to Petition rollo, p. 50.20 First Philippine International Bank vs. Court of Appeals, 252 SCRA

259, January 24, 1996 Servicewide Specialists, Inc. vs. Court of Appeals,257 SCRA 643, June 26, 1996.

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Lagazo vs. Court of Appeals

appeal, there is still need for proof that a formal notice ofsuch acceptance was received by the donor and noted inboth the deed of donation and the separate instrumentembodying the acceptance. At the very least, this last legalrequisite of annotation in both instruments of donation andacceptance 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 eventshave transpired which render the assailed Decisionmanifestly unjust, unfair and inequitable to him. TheCity of Manila has granted his request for the transfer tohis name of the lot originally awarded in favor of CatalinaReyes. A deed of sale

21 covering the subject lot has in fact

been executed between the City of Manila, as the vendorand petitioner, as the vendee. The corresponding certificateof title

22 has also been issued in petitioners name.

A close perusal of the city governments resolution23

granting petitioners request reveals that the request forand the grant of the transfer of the award were premisedon the validity and perfection of the deed of donationexecuted by the original awardee, petitionersgrandmother. This is the same document upon whichpetitioner, as against private respondent, asserts his rightover the lot. But, as earlier discussed and ruled, thisdocument has no force and effect and, therefore, passes notitle, right or interest. Furthermore, the same resolutionstates:

WHEREAS, in a report submitted by Ms. [Menchu C.] Bello [,Special Investigator,] on February 7, 1990, it is stated that x x xconstructed on the lot is a makeshift structure used forresidential

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21 Annex G to Petition rollo, pp. 5456.22 Annex A to Supplement to Petition rollo, pp. 6263.23 Annex E to Petition rollo, pp. 5152.

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30 SUPREME COURT REPORTS ANNOTATED

Lagazo vs. Court of Appeals

purposes by the proposed transferee Tito Lagazo and his family xx x and that constructed at Lot 8, Block 6, former MonserratEstate is a makeshift structure used as a dwelling place byLagazo and family because the front portion of their house whichwas constructed on a road lot was demolished, and the structurewas extended backward covering a portion of the old temporaryroad lot. x x x

The above findings of the investigator are, however,directly contradictory to the testimonies in court ofpetitioner himself and of private respondent. Petitionerclaimed the following: that the house constructed on thesubject lot was owned by his grandmother Catalina Jacobthat before the latter left for Canada in 1977, EduardoEspaol had already been living in the same house andcontinued to do so until 1982 and that private respondentoccupied the premises after Espaol left.

24 On the other

hand, private respondent testified that he bought thesubject house and lot from Eduardo Espaol in 1982, afterwhich he and his family occupied the same but sometimein 1985, they had to leave the place due to a roadwideningproject which reduced the house to about three meters [in]length and one arm[]s width.

25

Between the testimonies under oath of the contendingparties and the reportnot subjected to crossexaminationwhich was prepared by the investigator whorecommended the approval of petitioners request fortransfer, it is the former to which the Court is inclined togive more credence. The investigators report must havebeen based on the misrepresentations of petitioner whoarrogated unto himself the prerogatives of both Espaoland private respondent. Further, it is on record thatpetitioner had required private respondent to vacate thesubject premises before he instituted this complaint. Thisshows he was not in actual possession of the property,contrary to the report of the investigator.

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24 TSN, October 20, 1989, pp. 45.25 TSN, March 13, 1990, pp. 913.

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VOL. 287, MARCH 5, 1998 31Lagazo vs. Court of Appeals

Cabanlits Claim of OwnershipPetitioner also assails Respondent Courts conclusion thatit is unnecessary to pass upon private respondents claimover the property. Petitioner insists that the principal issuein the case, as agreed upon by the parties during pretrial,is who between the parties is the owner of the house andlot in question.

In disposing of the principal issue of the right ofpetitioner over the subject property under the deed ofdonation, we arrive at one definite conclusion: on the basisof the alleged donation, petitioner cannot be considered thelawful owner of the subject property. This does notnecessarily mean, however, that private respondent isautomatically the rightful owner. In resolving privaterespondents claim of ownership, the examination of thegenuineness of the documents (deeds of assignment overthe lot between Catalina Reyes and Eduardo Espaol andbetween Espaol and private respondent) upon which heasserts his right is necessary, especially in light ofpetitioners allegations of forgery. However, the respectiveassignors in both documents are not parties to the instantcase. Not having been impleaded in the trial court, theyhad no participation whatsoever in the proceedings at bar.Elementary norms of fair play and due process bar us frommaking any disposition which may affect their rights.Verily, there can be no valid judgment for or againstthem.

26

Anyhow, since petitioner, who was the plaintiff below,failed to prove with clear and convincing evidence hisownership claim over the subject property, the parties thusresume their status quo ante. The trial court should havedismissed his complaint for his failure to prove a rightsuperior to that of private respondent, but withoutprejudice to any action

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26 Matuguina Integrated Wood Products, Inc. vs. Court of Appeals, 263SCRA 490, October 24, 1996 Ang Yu Asuncion vs. Court of Appeals, 238SCRA 602, December 2, 1994. See also Periquet, Jr. vs. IntermediateAppellate Court, 238 SCRA 697, December 5, 1994.

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32 SUPREME COURT REPORTS ANNOTATEDLagazo vs. Court of Appeals

that Catalina Reyes or Eduardo Espaol or both may haveagainst said private respondent. Stating this pointotherwise, we are not ruling in this case on the rights andobligations between, on the one hand, Catalina Reyes, herassigns and/or representatives and, on the other, PrivateRespondent Cabanlit.

Not having proven any right to a valid, just anddemandable claim that compelled him to litigate or to incurexpenses in order to protect his interests by reason of anunjustified act or omission of private respondent, petitionercannot be awarded attorneys fees.

27

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

SO ORDERED.

Davide, Jr. (Chairman), Bellosillo, Vitug andQuisumbing, JJ., concur.

Petition denied Assailed decision affirmed.

o0o

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27 See Art. 2208, Civil Code. Solid Homes, Inc. vs. Court of Appeals, 235SCRA 299, August 12, 1994 Philippine National Bank vs. Court ofAppeals, 256 SCRA 44, April 2, 1996.

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