PROPERTY.cases.donation

PROPERTY

DONATIONOctober 13, 2012

I. Assigned Cases:

1. Catalan et al. vs. Jose Basa et al., G.R. No. 159567, July 3, 2007

(Art. 737)

Donors capacity to give consent at the time of donation, the burden of proving capacity.

2. Abello et al. vs. Commissioner of Internal Revenue et al., G.R. No. 120721, February 23,

2005

-Elements of Donation; Intent to Donate

3. Rolamdo Santos vs. Constancia Santos Alana, G.R. No. 154942

August 16, 2005

Art. 725- Donation is in officious if exceeds limitation

4. DECS vs. Julia del Rosario et al., G.R. No.146586, January 26, 2005

Art. 749-Donation must be in a public instrument

II. Quiz Coverage

Art. 725 – Art. 773

DONATION

G.R. No. 159567 : July 31, 2007

CORAZON CATALAN, LIBRADA CATALAN-LIM, EULOGIO CATALAN, MILA CATALAN-MILAN, ZENAIDA CATALAN, ALEX CATALAN, DAISY CATALAN, FLORIDA CATALAN and GEMMA CATALAN, Heirs of the late FELICIANO CATALAN, Petitioners, v. JOSE

BASA, MANUEL BASA, LAURETA BASA, DELIA BASA, JESUS BASA and ROSALINDA BASA, Heirs of the late MERCEDES CATALAN, Respondents.

D E C I S I O N

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the Court of Appeals decision in CA-G.R. CV No. 66073, which affirmed the judgment of the Regional Trial Court, Branch 69, Lingayen, Pangasinan, in Civil Case No. 17666, dismissing the Complaint for Declaration of Nullity of Documents, Recovery of Possession and Ownership, and damages.

The facts, which are undisputed by the parties, follow:cra:nad

On October 20, 1948, FELICIANO CATALAN (Feliciano) was discharged from active military service. The Board of Medical Officers of the Department of Veteran Affairs found that he was unfit to render military service due to his "schizophrenic reaction, catatonic type, which incapacitates him because of flattening of mood and affect, preoccupation with worries, withdrawal, and sparce (sic) and pointless speech."1 cra On September 28, 1949, Feliciano married Corazon Cerezo.2 cra On June 16, 1951, a document was executed, titled "Absolute Deed of Donation,"3wherein Feliciano allegedly donated to his sister MERCEDES CATALAN(Mercedes) one-half of the real property described, viz:cra:nad

A parcel of land located at Barangay Basing, Binmaley, Pangasinan. Bounded on the North by heirs of Felipe Basa; on the South by Barrio Road; On the East by heirs of Segundo Catalan; and on the West by Roman Basa. Containing an area of Eight Hundred One (801) square meters, more or less.

The donation was registered with the Register of Deeds. The Bureau of Internal Revenue then cancelled Tax Declaration No. 2876, and, in lieu thereof, issued Tax Declaration No. 180804 to Mercedes for the 400.50 square meters donated to her. The remaining half of the property remained in Feliciano's name under Tax Declaration No. 18081.5 cra On December 11, 1953, People's Bank and Trust Company filed Special Proceedings No. 45636 before the Court of First Instance of Pangasinan to declare Feliciano incompetent. On December 22, 1953, the trial court issued its Order for Adjudication of Incompetency for Appointing Guardian for the Estate and Fixing Allowance7 of Feliciano. The following day, the trial court appointed People's Bank and Trust Company as Feliciano's guardian.8 People's Bank and Trust Company has been subsequently renamed, and is presently known as the Bank of the Philippine Islands (BPI).

On November 22, 1978, Feliciano and Corazon Cerezo donated Lots 1 and 3 of their property, registered under Original Certificate of Title (OCT) No. 18920, to their son Eulogio Catalan.9 cra On March 26, 1979, Mercedes sold the property in issue in favor of her children

1 | P r o p e r t y : D o n a t i o n

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Delia and Jesus Basa.10 The Deed of Absolute Sale was registered with the Register of Deeds of Pangasinan on February 20, 1992, and Tax Declaration No. 12911 was issued in the name ofRespondents.11 cra On June 24, 1983, Feliciano and Corazon Cerezo donated Lot 2 of the aforementioned property registered under OCT No. 18920 to their children Alex Catalan, Librada Catalan and Zenaida Catalan. On February 14, 1983, Feliciano and Corazon Cerezo donated Lot 4 (Plan Psu-215956) of the same OCT No. 18920 to Eulogio and Florida Catalan.12 cra On April 1, 1997, BPI, acting as Feliciano's guardian, filed a case for Declaration of Nullity of Documents, Recovery of Possession and Ownership,13 as well as damages against the herein Respondents. BPI alleged that the Deed of Absolute Donation to Mercedes was void ab initio, as Feliciano never donated the property to Mercedes. In addition, BPI averred that even if Feliciano had truly intended to give the property to her, the donation would still be void, as he was not of sound mind and was therefore incapable of giving valid consent. Thus, it claimed that if the Deed of Absolute Donation was void ab initio, the subsequent Deed of Absolute Sale to Delia and Jesus Basa should likewise be nullified, for Mercedes Catalan had no right to sell the property to anyone. BPI raised doubts about the authenticity of the deed of sale, saying that its registration long after the death of Mercedes Catalan indicated fraud. Thus, BPI sought remuneration for incurred damages and litigation expenses.

On August 14, 1997, Feliciano passed away. The original complaint was amended to substitute his heirs in lieu of BPI as complainants in Civil Case No. 17666.

On December 7, 1999, the trial court found that the evidence presented by the complainants was insufficient to overcome the presumption that Feliciano was sane and competent at the time he executed the deed of donation in favor of Mercedes Catalan. Thus, the court declared, the presumption of sanity or competency not having been duly impugned, the presumption of due execution of the donation in question must be upheld.14 It rendered judgment, viz:cra:nad

WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered:

1. Dismissing plaintiff's complaint;

2. Declaring the defendants Jesus Basa and Delia Basa the lawful owners of the land in question which is now declared in their names under Tax Declaration No. 12911 (Exhibit 4);

3. Ordering the plaintiff to pay the defendants Attorney's fees of P10,000.00, and to pay the Costs.(sic)

SO ORDERED.15 cra Petitioners challenged the trial court's decision before the Court of Appeals via a Notice of Appeal pursuant to Rule 41 of the Revised Rules of Court.16 The appellate court affirmed the decision of the trial court and held, viz:cra:nad

In sum, the Regional Trial Court did not commit a reversible error in disposing that plaintiff-appellants failed to prove the insanity or mental incapacity of late (sic) Feliciano Catalan at the precise moment when the property in dispute was donated.

Thus, all the elements for validity of contracts having been present in the 1951 donation coupled with compliance with certain solemnities required by the Civil Code in donation inter vivos of real property under Article 749, which provides:cra:nad

x x x

Mercedes Catalan acquired valid title of ownership over the property in dispute. By virtue of her ownership, the property is completely subjected to her will in everything not prohibited by law of the concurrence with the rights of others (Art. 428, NCC).

The validity of the subsequent sale dated 26 March 1979 (Exhibit 3, appellees' Folder of Exhibits) of the property by Mercedes Catalan to defendant-appellees Jesus Basa and Delia Basa must be upheld. Nothing of the infirmities which allegedly flawed its authenticity is evident much less apparent in the deed itself or from the evidence adduced. As correctly stated by the RTC, the fact that the Deed of Absolute Sale was registered only in 1992, after the death of Mercedes Catalan does not make the sale void ab initio. Moreover, as a notarized document, the deed of absolute sale carries the evidentiary weight conferred upon such public document with respect to its due execution (Garrido vs. CA 236 SCRA 450). In a similar vein, jurisprudence has it that documents acknowledged before a notary public have in their favor the presumption of regularity, and to contradict the same, there must be evidence that is clear, convincing and more than preponderant (Salame vs. CA, 239 SCRA 256).

WHEREFORE, foregoing premises considered, the Decision dated December 7, 1999 of the Regional Trial Court, Branch 69, is hereby affirmed.

SO ORDERED.17 cra Thus, petitioners filed the present appeal and raised the following issues:

1. WHETHER OR NOT THE HONORABLE COURT OF APPEALS HAS DECIDED CA-G.R. CV NO. 66073 IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE HONORABLE COURT IN HOLDING THAT "THE REGIONAL TRIAL COURT DID NOT COMMIT A REVERSIBLE ERROR IN DISPOSING THAT PLAINTIFF-APPELLANTS (PETITIONERS) FAILED TO PROVE THE INSANITY OR MENTAL INCAPACITY OF THE LATE FELICIANO CATALAN AT THE PRECISE MOMENT WHEN THE PROPERTY IN DISPUTE WAS DONATED";

2. WHETHER OR NOT THE CERTIFICATE OF DISABILITY FOR DISCHARGE (EXHIBIT "S") AND THE REPORT OF A BOARD OF OFFICERS CONVENED UNDER THE PROVISIONS OF ARMY REGULATIONS (EXHIBITS "S-1" AND "S-2") ARE ADMISSIBLE IN EVIDENCE;

3. WHETHER OR NOT THE HONORABLE COURT OF APPEALS HAS DECIDED CA-G.R. CV NO. 66073 IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE HONORABLE COURT IN UPHOLDING THE SUBSEQUENT SALE OF THE PROPERTY IN DISPUTE BY THE DONEE MERCEDES CATALAN TO HER CHILDREN RESPONDENTS JESUS AND DELIA BASA; AND-










4. WHETHER OR NOT CIVIL CASE NO. 17666 IS BARRED BY PRESCRIPTION AND LACHES.18

Petitioners aver that the presumption of Feliciano's competence to donate property to Mercedes had been rebutted because they presented more than the requisite preponderance of evidence. First, they presented the Certificate of Disability for the Discharge of Feliciano Catalan issued on October 20, 1948 by the Board of Medical Officers of the Department of Veteran Affairs. Second, they proved that on December 22, 1953, Feliciano was judged an incompetent by the Court of First Instance of Pangasinan, and put under the guardianship of BPI. Based on these two pieces of evidence, petitioners conclude that Feliciano had been suffering from a mental condition since 1948 which incapacitated him from entering into any contract thereafter, until his death on August 14, 1997. Petitioners contend that Feliciano's marriage to Corazon Cerezo on September 28, 1948 does not prove that he was not insane at the time he made the questioned donation. They further argue that the donations Feliciano executed in favor of his successors (Decision, CA-G.R. CV No. 66073) also cannot prove his competency because these donations were approved and confirmed in the guardianship proceedings.19 In addition, petitioners claim that the Deed of Absolute Sale executed on March 26, 1979 by Mercedes Catalan and her children Jesus and Delia Basa is simulated and fictitious. This is allegedly borne out by the fact that the document was registered only on February 20, 1992, more that 10 years after Mercedes Catalan had already died. Since Delia Basa and Jesus Basa both knew that Feliciano was incompetent to enter into any contract, they cannot claim to be innocent purchasers of the property in question.20 Lastly, petitioners assert that their case is not barred by prescription or laches under Article 1391 of the New Civil Code because they had filed their case on April 1, 1997, even before the four year period after Feliciano's death on August 14, 1997 had begun.21 cra The petition is bereft of merit, and we affirm the findings of the Court of Appeals and the trial court.

A donation is an act of liberality whereby a person disposes gratuitously a thing or right in favor of another, who accepts it.22 Like any other contract, an agreement of the parties is essential. Consent in contracts presupposes the following requisites: (1) it should be intelligent or with an exact notion of the matter to which it refers; (2) it should be free; and (3) it should be spontaneous.23 The parties' intention must be clear and the attendance of a vice of consent, like any contract, renders the donation voidable.24 cra In order for donation of property to be valid, what is crucial is the donor's capacity to give consent at the time of the donation. Certainly, there lies no doubt in the fact that insanity impinges on consent freely given.25 However, the burden of proving such incapacity rests upon the person who alleges it; if no sufficient proof to this effect is presented, capacity will be presumed.26 cra A thorough perusal of the records of the case at bar indubitably shows that the evidence presented by the petitioners was insufficient to overcome the presumption that Feliciano was competent when he donated the property in question to Mercedes. Petitioners make much ado of the fact that, as early as 1948, Feliciano had been found to be suffering from schizophrenia by the Board of Medical Officers of the Department of Veteran Affairs. By itself, however, the allegation cannot prove the incompetence of Feliciano.

A study of the nature of schizophrenia will show that Feliciano could still be presumed capable of attending to his property rights. Schizophrenia was brought to the attention of the public when, in the late 1800s, Emil Kraepelin, a German psychiatrist, combined "hebrephrenia" and "catatonia" with certain paranoid states and called the condition "dementia praecox." Eugene

Bleuler, a Swiss psychiatrist, modified Kraepelin's conception in the early 1900s to include cases with a better outlook and in 1911 renamed the condition "schizophrenia." According to medical references, in persons with schizophrenia, there is a gradual onset of symptoms, with symptoms becoming increasingly bizarre as the disease progresses. The condition improves (remission or residual stage) and worsens (relapses) in cycles. Sometimes, sufferers may appear relatively normal, while other patients in remission may appear strange because they speak in a monotone, have odd speech habits, appear to have no emotional feelings and are prone to have "ideas of reference." The latter refers to the idea that random social behaviors are directed against the sufferers.27 It has been proven that the administration of the correct medicine helps the patient. Antipsychotic medications help bring biochemical imbalances closer to normal in a schizophrenic. Medications reduce delusions, hallucinations and incoherent thoughts and reduce or eliminate chances of relapse.28 Schizophrenia can result in a dementing illness similar in many aspects to Alzheimer's disease. However, the illness will wax and wane over many years, with only very slow deterioration of intellect.29 cra From these scientific studies it can be deduced that a person suffering from schizophrenia does not necessarily lose his competence to intelligently dispose his property. By merely alleging the existence of schizophrenia, petitioners failed to show substantial proof that at the date of the donation, June 16, 1951, Feliciano Catalan had lost total control of his mental faculties. Thus, the lower courts correctly held that Feliciano was of sound mind at that time and that this condition continued to exist until proof to the contrary was adduced.30 Sufficient proof of his infirmity to give consent to contracts was only established when the Court of First Instance of Pangasinan declared him an incompetent on December 22, 1953.31cra It is interesting to note that the petitioners questioned Feliciano's capacity at the time he donated the property, yet did not see fit to question his mental competence when he entered into a contract of marriage with Corazon Cerezo or when he executed deeds of donation of his other properties in their favor. The presumption that Feliciano remained competent to execute contracts, despite his illness, is bolstered by the existence of these other contracts. Competency and freedom from undue influence, shown to have existed in the other acts done or contracts executed, are presumed to continue until the contrary is shown.32 cra Needless to state, since the donation was valid, Mercedes had the right to sell the property to whomever she chose.33 Not a shred of evidence has been presented to prove the claim that Mercedes' sale of the property to her children was tainted with fraud or falsehood. It is of little bearing that the Deed of Sale was registered only after the death of Mercedes. What is material is that the sale of the property to Delia and Jesus Basa was legal and binding at the time of its execution. Thus, the property in question belongs to Delia and Jesus Basa.

Finally, we note that the petitioners raised the issue of prescription and laches for the first time on appeal before this Court. It is sufficient for this Court to note that even if the present appeal had prospered, the Deed of Donation was still a voidable, not a void, contract. As such, it remained binding as it was not annulled in a proper action in court within four years.34 cra IN VIEW WHEREOF, there being no merit in the arguments of the petitioners, the petition is DENIED. The decision of the Court of Appeals in CA-G.R. CV No. 66073 is affirmed in toto.

SO ORDERED.



















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.

D E C I S I O N

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 donor's 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 petitionersP263,032.66 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 donor's tax. The claim for exemption was denied by the Commissioner.[1]

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 donor's 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 donor's 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 donor's 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


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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 donor's or gift tax is imposed on the transfer of property by gift.

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 donor's 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. Abello[8], 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 Angara's patrimony correspondingly increased by P3,530,645.24[9]. 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 Court [10] 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. Ambiguity 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,




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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 donor's 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 donor's 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.

ROLANDO SANTOS,

Petitioner,

- versus -

CONSTANCIA SANTOS ALANA,

Respondent.

G.R. No. 154942

x---------------------------------------------------------------------------------------------x

D E C I S I O N

Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil

Procedure, as amended, assailing the Decision [1] dated March 7, 2002 and Resolution dated

July 24, 2002 of the Court of Appeals in C.A.-G.R. CV No. 40728.

A brief narration of the factual antecedents follows:


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Rolando Santos, petitioner, and Constancia Santos Alana, respondent, are half-blood siblings both asserting their claim over a 39-square meter lot located at 1339-B Andalucia St., Sta. Cruz, . It was registered in the name of their father, Gregorio Santos, under Transfer Certificate of Title (TCT) No. 14278 of the Registry of Deeds of . He died intestate on March 10, 1986.

During his lifetime, or on January 16, 1978, Gregorio donated the lot to petitioner which the latter accepted on June 30, 1981. The deed of donation (Pagsasalin ng Karapatan at Pag-aari') was annotated on Gregorio's title.

On April 8, 1981, Gregorio sold the lot to petitioner as per a Deed of Absolute Sale.

On June 26, 1981, by virtue of the annotated deed of donation, TCT No. 14278 in Gregorio's name was cancelled and in lieu thereof, TCT No. 144706 was issued by the Registry of Deeds of in petitioner's name.

On January 11, 1991, respondent Constancia Santos filed with the Regional Trial Court of , Branch 15, a complaint for partition and reconveyance against petitioner. She alleged that during his lifetime, her father Gregorio denied having sold the lot to petitioner; that she learned of the donation in 1978; and that the donation is inofficious as she was deprived of her legitime.

In his answer, petitioner countered that respondent's suit is barred by prescription considering that she is aware that he has been in possession of the lot as owner for more than ten (10) years; and that the lot was sold to him by his father, hence, respondent can no longer claim her legitime.

The trial court found that the Deed of Absolute Sale was not signed by the parties nor was it registered in the Registry of Deeds. Thus, it is not a valid contract. What is valid is the deed of donation as it was duly executed by the parties and registered.

The trial court then held that since Gregorio did not own any other property, the donation to petitioner is inofficious because it impaired respondent's legitime.

The dispositive portion of the trial court's Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring the Deed of Donation inofficious insofar as it impair the legitime of the plaintiff which is ' the of the subject property.

The Registry of Deeds of is hereby ordered to cancel the entry in TCT No. 14278 of the Deed of Donation dated January 16, 1978 and to cancel TCT No. 144706 issued based on said entry.

The parties are enjoined to institute the proper action for the settlement of the Estate of Gregorio Santos and for the eventual partition of the estate.[2]

On appeal, the Court of Appeals affirmed the trial court's Decision, holding that:There are in the instant case two documents by which the subject property was purportedly transferred to the defendant ' a deed of donation and a deed of sale.x x x

There can, therefore, be no way by which the appellant may successfully convince us that Gregorio Santos sold the property in dispute to him and such sale can bind the appellee so as to remove the case from the realm of the law on donations.

Moreover, as aptly put by the trial court:

In general one who has disposed his property would not and could not have disposed the same again unless the previous act was rendered invalid or ineffective.

The validity of the Deed of Donation was never assailed by the defendant. In fact, it was impliedly recognized as valid by defendant by registering the same to the Registry of Deeds.

It is the honest belief of this Court, given the circumstances, i.e., the existence of the vendor and the vendee in the Deed of Absolute Sale and the registration of the Deed of Donation despite the supposed previous execution of (the) Deed of Absolute Sale, that there was no valid deed of sale executed and that the true and real agreement between Gregorio Santos and Rolando Santos was that of a donation.

Furthermore, considering that defendant himself registered the Deed of Donation, he cannot now close his eyes and deny the existence of the same by alleging that there had been a deed of sale executed previously. (Appealed Decision, supra, at pp. 238-239)

x x x

While a person may dispose of his property by donation, there is a limitation to the same. The law provides that no person may give or



receive, by way of donation, more than he may give or receive by will, and any donation which may exceed the foregoing is considered inofficious. x x x 'The donation shall be inofficious in all that it may exceed this limitation. (Article 752, Civil Code) The said donation may correspondingly be reduced insofar as it exceeds the portion that may be freely disposed of by will (ART. 761).

x x x It has been undisputedly shown that the subject property was the only property of the deceased Gregorio Santos at the time of his death on March 10, 1986 (Exhibit 'K', Original Record, p. 163); and that he made no reservation for the legitime of the plaintiff-appellee, his daughter (See paragraph 2, Complaint and paragraph 2, Answer, Ibid., at pp 1 and 12) and compulsory heir. Clearly, the rule on officiousness applies. x x x

x x x Defendant-appellant finally argues that since plaintiff-appellee knew of the donation since 1978, while the donor Gregorio Santos was still alive, her assailing the said donation only on January 11, 1991 or thirteen years after, has effectively barred her from instituting the present action. The foregoing is apparently groundless and without merit. The inofficiousness of a donation cannot be determined until after the death of the donor because prior to his death, the value of his estate cannot be determined or computed. Determination of the value of the deceased's estate will require the collation of all properties or rights, donated or conveyed by gratuitous title to the compulsory heirs in order that they may be included in the computation for the determination of the legitime of each heir and for the account of partition (Art. 1061, Civil Code).[3]

Hence, the instant petition.

The findings of the courts below that (1) Gregorio donated to petitioner the subject lot; (2) the Deed of Absolute Sale is void; and (3) Gregorio's only property is the said lot ' are all factual in nature which are not within the domain of this Court for it is not a trier of facts. [4] Basic is it that findings of fact by the trial court, especially when affirmed on appeal, as in this case, are conclusive and binding upon this Court. [5]

The issues which involve questions of law are: (1) whether the donation is inofficious; and (2) whether the respondent's action has prescribed.

I. Whether the donation is inofficious.

It bears reiterating that under Article 752 of the Civil Code, the donation is inofficoius if it exceeds this limitation ' no person may give or receive, by way of donation, more than he may give or receive by will. ' In Imperial vs. Court of Appeals, [6] we held that inofficiousness may arise only upon the death of the donor as the value of donation may then be contrasted with the net value of the estate of the donor deceased.

At this point, we emphasize that as found by the trial court, Gregorio did not sell the lot to petitioner. He donated it. The trial court also found that the donation is inofficious as it impairs respondent's legitime; that at the time of Gregorio's death, he left no property other than the lot now in controversy he donated to petitioner; and that the deceased made no reservation for the legitime of respondent, his daughter and compulsory heir. These findings were affirmed by the Court of Appeals.

Pursuant to Article 752 earlier cited, Gregorio could not donate more than he may give by will. Clearly, by donating the entire lot to petitioner, we agree with both lower courts that Gregorio's donation is inofficious as it deprives respondent of her legitime, which, under Article 888 of the Civil Code, consists of one-half (1/2) of the hereditary estate of the father and the mother. Since the parents of both parties are already dead, they will inherit the entire lot, each being entitled to one-half (1/2) thereof.

II. Whether respondent's suit is barred by prescription.

In Imperial vs. Court of Appeals, [7] we held that 'donations, the reduction of which hinges upon the allegation of impairment of legitime (as in this case), are not controlled by a particular prescriptive period, for which reason, we must resort to the ordinary rules of prescription. Under Article 1144 of the Civil Code, actions upon an obligation created by law must be brought within ten years from the time the right of action accrues. Thus, the ten-year prescriptive period applies to the obligation to reduce inofficious donations, required under Article 771 of the Civil Code, [8] to the extent that they impair the legitime of compulsory heirs.

From when shall the ten-year period be reckoned? In Mateo vs. Lagua, [9] involving the reduction, for inofficiousness, of a donation propter nuptias, we held that the cause of action to enforce a legitime accrues upon the death of the donor-decedent. Clearly so, since it is only then that the net estate may be ascertained and on which basis, the legitimes may be determined.

Here, Gregorio died in 1986. Consequently, respondent had until 1996 within which to file the action. Records show that she filed her suit in 1992, well within the prescriptive period.

WHEREFORE , the petition is DENIED. The challenged Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 40728 are hereby AFFIRMED, with modification in the sense that the subject deed of donation being inofficious, one half (1/2) of the lot covered by TCT No. 14278 of the Registry of Deeds of is awarded to Constancia Santos Alana, respondent, the same being her legitime. The remaining one-half (1/2) shall be retained by petitioner, Rolando Santos, as his legitime and by virtue of the donation.









Costs against petitioner.

SO ORDERED.

G.R. No. 146586. January 26, 2005

DEPARTMENT OF EDUCATION CULTURE and SPORTS, Petitioner, vs. JULIA DEL ROSARIO, MARIA DEL ROSARIO, PACENCIA DEL ROSARIO, and HEIRS OF SANTOS

DEL ROSARIO, Respondents.

The Case

This is a petition for review[1] to set aside the Decision[2] dated 25 September 2000 and the Resolution dated 29 December 2000 of the Court of Appeals in CA-G.R. CV No. 43929. The Court of Appeals reversed the Decision[3]dated 7 July 1993 of the Regional Trial Court of Bulacan, Branch 8, Malolos (trial court') in Civil Case No. 70-M-92.

The Facts

On 14 February 1992, respondents Julia Del Rosario, Maria Del Rosario, Pacencia Del Rosario and the Heirs of Santos Del Rosario (respondents') filed before the trial court a complaint for Recovery of Possession against petitioner Department of Education, Culture and Sports (DECS'). Respondents alleged that they own a parcel of land with an area of 1,181 square meters (Property') situated in Kaypombo,[4] Sta. Maria, Bulacan. The Property was registered in 1976 in the name of respondents under Transfer Certificate of Title No. T-222432 of the Bulacan Register of Deeds. Respondents alleged that the Kaypombo Primary School Annex (KPPS') under DECS was occupying a portion of the Property through respondents' tolerance and that of their predecessors-in-interest. Respondents further alleged that KPPS refused to vacate the premises despite their valid demands to do so.

In its Answer, DECS countered that KPPS's occupation of a portion of the Property was with the express consent and approval of respondents' father, the late Isaias Del Rosario (Isaias'). DECS claimed that some time in 1959 Isaias donated a portion (Donated Site') of the Property

to the Municipality of Sta. Maria (Municipality') for school site purposes. Atty. Ely Natividad, now a regional trial court judge (Judge Natividad'), prepared the deed of donation and the acceptance. KPPS started occupying the Donated Site in 1962. At present, KPPS caters to the primary educational needs of approximately 60 children between the ages of 6 and 8. Because of the donation, DECS now claims ownership of the 650 square meter Donated Site. In fact, DECS renamed the school the Isaias Del Rosario Primary School.

During the pre-trial conference held on 3 September 1992, DECS admitted the existence and execution of TCT No. T-222432 (Exhibit 'A'), Tax Declaration No. 6310 (Exhibit 'B'), and the tax receipts in respondents' names for the years 1991 and 1992 (Exhibits 'B-1 and 'B-2'). On the other hand, respondents admitted the existence of Judge Natividad's affidavit that he prepared the deed of donation (Exhibit '1') and the tax declaration for 1985 in the Municipality's name (Exhibit '2'). Since there was no dispute that the Property was registered in respondents' names, the parties agreed to a reverse trial with DECS presenting its evidence first to prove that there was a valid donation to the Municipality.

DECS presented three witnesses: Ricardo Nicolas, Vidal De Jesus and Judge Natividad, all residents of Kaypombo, Sta. Maria, Bulacan. The trial court summarized the witnesses' testimonies, thus:

Defendant, represented by the Office of the Solicitor General, proceeded to present as its first witness, Ricardo Nicolas, 78 years old, widower, housekeeper and residing at [K]aypombo, Sta. Maria, Bulacan, since 1953 up to the present. He testified that during the duration of his residency in [K]aypombo, he came across' a public elementary school (KPPS); that as far as he knows, the land occupied by the primary school was formerly owned by Isaias del Rosario who donated said land to the people of Sta. Maria, Bulacan in 1959; that the act of donating said land was made during a political meeting in his residence by Isaias del Rosario and in the presence of the then incumbent mayor; he actually saw Isaias del Rosario and Mayor Ramos sign a document which is a deed of donation in favor of the Municipality of Sta. Maria; that the signing was made in the presence of Judge Natividad who was then a municipal councilor; that Isaias del Rosario is now dead but his death occurred long after the construction of the KPPS and that Isaias del Rosario even witnessed the construction of the primary school.

Vidal de Jesus, the second witness' for the defense, 65 years old, married, a barangay councilman of Kaypombo, Sta. Maria, Bulacan, and presently residing at No. 437 Kaypombo, Sta. Maria, Bulacan, testified that as barangay councilman, he was aware of the land problem of KPPS; that in 1991, the barangay council and the children of Isaias del Rosario had a meeting in the presence of Judge Natividad, during which, the latter told the children of Isaias del Rosario that the land had been donated by their father. The children agreed but requested that the school be renamed after their father's name; that the barangay council tried to secure a copy of the deed of donation from the Municipality of Sta. Maria, but according to the people at the municipal hall, when they transferred to the new municipal building, the deed got lost, only they were able to get a copy of the tax declaration in the name of the municipality of Sta. Maria, Bulacan (Exh. '2'), a certification to that effect was issued by the municipal mayor (Exh. '3'). They went to the DECS office in Malolos, but could not likewise find a copy of the deed.

The last witness for the defense was Judge Eli Natividad, 63 years old, widower, resident of Kaypombo, Sta. Maria, Bulacan. He testified that KPPS is very near his house; that the land


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occupied by said school is formerly owned by Isaias del Rosario, a close relative; that as far as he knows, the municipality of Sta. Maria is now the owner of the land; that when he was still one of the incumbent municipal councilors of Sta. Maria in 1961, his relative Isaias del Rosario went to his house and told him that he wanted to have a primary school in their place as' he saw the plight of small pupils in their place; that the elementary school then existing was very far from their place and Isaias del Rosario wanted to have a primary school to help these pupils; that Isaias del Rosario was willing to donate a portion of the questioned lot for school site, so that said matter was relayed to the municipal council; he also testified that he prepared the deed of donation which was signed by Isaias del Rosario in his residence which was accepted by the municipality of Sta. Maria, Bulacan through a resolution signed in the office of the secretary and the municipal mayor; that a copy of said resolution could not be found due to the transfer of the municipal hall from the old to the new building.[5]

Respondents presented two witnesses: Eugenia R. Ignacio and Maria Del Rosario-Esteban, daughters of the late Isaias. The trial court summarized their testimonies, as follows:

For the plaintiffs, Eugenia R. Ignacio, 59, residing at Kaypombo, Sta. Maria, Bulacan testified that she knows the plaintiffs as they are her brothers/sisters; that their father Isaias del Rosario died on April 18, 1966 long after the construction of the school and that she does not know everything about the donation because her father never informed them of his dealings and she did not inquire from him about the occupancy of the lot by the school.

Maria del Rosario-Esteban, 66, residing at Pulang-lupa, Pandi, one of the plaintiffs herein, testified that she knows the property in question and that they own it by virtue of succession and that she cannot recall how the school was constructed on the land; that her parents never donated any property because that is their only property. Also, she stated that their father told them that he just lent the property temporarily to the municipality and she never found any document conveying the lot in question to the municipality of Sta. Maria, Bulacan.[6]

On 7 July 1993, the trial court rendered judgment dismissing respondents' complaint for recovery of possession as follows:

WHEREFORE, based on the foregoing premises, and for a much greater cause, the instituted complaint, for recovery of possession of 1,181 square meters of land in Kaypombo, Sta. Maria, Bulacan, covered by TCT No. T-222432 against the defendant is hereby DISMISSED without costs.[7]

The trial court explained its decision in this wise:

After a careful consideration of the facts at hand, taking into account the credibility and reasonableness of the testimonies of the witnesses, the court is of the opinion that the defense was able to prove the due execution of the deed of donation and its acceptance, as well as the loss of the same, in accordance with Rule 130[,] Sec. 4. It is recalled that Judge Eli Natividad, then a municipal councilor of Sta. Maria, testified that he was the person who prepared the deed of donation and later notarized the same, and that said deed was duly executed and signed before him and in his presence. Likewise, he affirmed that the municipal board of Sta. Maria, Bulacan, passed a resolution accepting the deed of donation in favor of

the said municipality. Noteworthy is the rule that a recantation/recollection of witness is a form of secondary evidence to prove the existence/content of a document. Since the loss of the deed subject matter of this case was likewise duly proved by the defense, exerting the best possible efforts to locate or secure a copy of the same and without bad faith on its part, this Court is bent to give a greater weight to the secondary evidence adduced by the defense vis--vis the title in the name of the plaintiff[s], most particularly in this case, where the plaintiffs failed to make it appear that other and more secondary evidence is known to the defendant and can be produced by them.

Further judging on the consistency, credibility and personality of the witnesses of the defense, notably Judge Eli Natividad who was then a municipal councilor of Sta. Maria at the time of the execution of the deed of donation and who is thus in a best position to testify on the matter, not to mention the fact that their testimonies were all under oath, the Court cannot avoid but give weight to their statements and declarations. The defense witnesses were not induced by ill motive to testify in favor of the DECS, considering that they will not derive any personal benefit, material or otherwise, from such an act. On the contrary, such act may be considered heroic, as it is a manifestation of a moral compulsion to help shed light to the truth.

On the part of the plaintiffs, it was testified to by Eugenia Ignacio that their father (donor) died on April 18, 1966, long after the school was constructed on the subject land with the occupation of the land by the school which continued up to the present, and even after the land was allegedly transferred by succession to the plaintiffs in 1976, it was only now that it comes to the mind of the plaintiffs to seek recovery of the possession of the same. This, among other things, may be taken to favor the stand of the defense that the land occupied by the school was in truth, donated to the municipality of Sta. Maria.[8]

Respondents appealed to the Court of Appeals. On 25 September 2000, the Court of Appeals rendered judgment as follows:

WHEREFORE, premises considered, the appealed decision is REVERSED and another one entered ordering the defendant to vacate the subject premises.[9]

The appellate court denied DECS' motion for reconsideration in the Resolution dated 29 December 2000. Hence, this petition.

The Court of Appeals' Ruling

The Court of Appeals held that DECS failed to prove the existence and due execution of the deed of donation as well as the Resolution of the municipal council accepting the donation. The Court of Appeals was not fully satisfied that DECS or the Municipality had made a diligent search of the alleged 'lost deed of donation. Pertinent portions of the Court of Appeals' Decision read:

It is unfortunate that the Deed of Donation and the Resolution were not produced during the trial. The defendant alleged that these were lost when the Municipality transferred to a new building. The defendant resorted to proving the documents' existence through Sec. 5 of Rule







130 (B) of the Revised Rules on Evidence by relying on the testimony of the witnesses who were present during the execution of the lost documents. xxx.

xxx

The Court disagrees with the ruling of the lower court to the effect that the defendant was able to satisfy the foregoing requisites. The defense was not able to prove the due execution or existence of the deed of donation and the resolution, as well as the loss of these documents as the cause of their unavailability.

The Rule requires that the defendant must 'prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of the witnesses in the order stated. However, the defendant proceeded with the last resort-testimony of the witnesses, without even showing any diligent effort to secure a copy of the deed of donation and the resolution. Note that Atty. Eli Natividad, then a municipal councilor of Sta. Maria, testified that he was the person who prepared the deed of donation and later notarized the same. He also affirmed that the municipal board of Sta. Maria, Bulacan passed a Resolution as he was a municipal councilor at that time such resolution was passed. He testified that he furnished the municipal government, the Division Office of Education in Bulacan, the court of Sta. Maria a copy of the deed. However, the defendant only submitted an affidavit showing that the deed can no longer be located in the municipal government. There was no evidence to show that the defendant looked for a copy from the Clerk of Court of Sta. Maria, Bulacan. If it is true that Atty. Natividad notarized the deed, he should have a copy of it. In fact, such act of notarizing the deed should have been in his notarial register. This notarial register was supposed to be forwarded to the Clerk of Court of the Court of First Instance of the province and later, to the Chief of the National Library.

Before secondary evidence of a writing may be introduced on the ground that the instrument has been lost there must be proof that a diligent search has been made in the place where it is most likely to be found and that the search has not been successful.

In the case at bar, this Court is not fully satisfied that a search was made or that there was diligence in the search. The lower court erred in hastily concluding that the loss of the document was sufficiently established when in fact, the defendant did not look for it in the office of the Clerk of Court and the National Library. Since there was no diligent search, this Court finds it hard to believe the defendant's theory that such documents existed because, for sure, if there really was a notarized deed or a resolution, there must be a copy.

Secondary evidence of the contents of writings is admitted upon the theory that the original cannot be produced by the party by whom the evidence is offered within a reasonable time by the exercise of reasonable diligence. Until, however, the non-production of the primary evidence has been sufficiently accounted for, secondary evidence is not ordinarily admissible.

For this Court to affirm the ruling of the lower court based on testimonies alone will work injustice to the plaintiffs.[10]

The Issue

In its memorandum, DECS raises the sole issue of '

WHETHER THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER FAILED TO PROVE THE DUE EXECUTION OR EXISTENCE OF THE DEED OF DONATION AND THE RESOLUTION OF THE MUNICIPAL COUNCIL ACCEPTING THE DONATION, AS WELL AS THE LOSS OF THE DOCUMENTS AS THE CAUSE OF THEIR UNAVAILABILITY.[11]

The Solicitor General contends that DECS had satisfactorily proven by secondary evidence the fact of donation, the existence and due execution of the deed of donation as well as the municipal council Resolution accepting the donation. DECS had also adequately proven the loss of these documents. According to the Solicitor General, based on the evidence presented in the trial court, DECS established that Isaias donated a parcel of land to the Municipality as the site of a school. Isaias executed a deed of donation, which then Atty. Eli Natividad notarized. There was a municipal council Resolution accepting the donation and expressing gratitude to Isaias. There was notice of this acceptance as DECS constructed the school on the Donated Site during the lifetime of the donor, without objection on his part. Since all the essential formalities had been followed, the donation made by Isaias long after the death of his wife Nieves Gumatay is valid and proven by secondary evidence.

The Court's Ruling

The petition lacks merit.

Formal Requisites of Donations of Real Property

The donation of real property, which is a solemn contract, is void without the formalities stated in Article 749 of the Civil Code of the Philippines (Civil Code'). Article 749 of the Civil Code reads:

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.




Article 749 of the Civil Code requires that the donation of real property must be made in a public instrument. Otherwise, the donation is void. A deed of donation acknowledged before a notary public is a public document.[12]The notary public shall certify that he knows the person acknowledging the instrument and that such person is the same person who executed the instrument, acknowledging that the instrument is his free act and deed. The acceptance may be made in the same deed of donation or in a separate instrument. An acceptance made in a separate instrument must also be in a public document. If the acceptance is in a separate public instrument, the donor shall be notified in writing of such fact. Both instruments must state the fact of such notification.[13]

Best and Secondary Evidence

The best or primary evidence of a donation of real property is an authentic copy of the deed of donation with all the formalities required by Article 749 of the Civil Code. The duty to produce the original document arises when the subject of the inquiry are the contents of the writing in which case there can be no evidence of the contents of the writing other than the writing itself. Simply put, when a party wants to prove the contents of the document, the best evidence is the original writing itself.

A party may prove the donation by other competent or secondary evidence under the exceptions in Section 3, Rule 130 of the Revised Rules on Evidence. Section 3 reads:

SEC. 3. Original document must be produced; exceptions . When the subject of inquiry is the contents of a document, no evidence shall be admissible other than the original document itself, except in the following cases:

(a) When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the part of the offeror;

(b) xxx;

(c) xxx;

(d) xxx.

In relation to this, Section 5 of Rule 130 reads:

SEC. 5. When original document is unavailable. ' When the original document has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses in the order stated.

Secondary evidence of the contents of a document refers to evidence other than the original document itself.[14] A party may introduce secondary evidence of the contents of a written instrument not only when the original is lost or destroyed, but also when it cannot be produced

in court, provided there is no bad faith on the part of the offeror. However, a party must first satisfactorily explain the loss of the best or primary evidence before he can resort to secondary evidence. A party must first present to the court proof of loss or other satisfactory explanation for non-production of the original instrument. The correct order of proof is as follows: existence , execution, loss, contents, although the court in its discretion may change this order if necessary.[15]

The testimony of Ricardo Nicolas may have established to some extent the existence of the deed of donation since he testified that he was present when Isaias and the mayor talked about the donation and that he witnessed the signing of the document. However, Ricardo Nicolas admitted during cross-examination that he did not read and did not have personal knowledge of the contents of the document that Isaias and the mayor supposedly signed.[16]

In the same vein, Vidal De Jesus' testimony does not help to establish the deed of donation's existence, executionand contents. He testified that he never saw the deed of donation. On cross-examination, Vidal De Jesus admitted that the information that Isaias donated the lot to the Municipality was only relayed to him by Judge Natividad himself.[17] If at all, DECS offered Vidal De Jesus' testimony to establish the loss of the deed of donation. Vidal de Jesus testified that the barangay council tried to get a copy of the deed but the Municipality informed the barangay council that the deed was lost when the municipal office was transferred to a new building. DECS also made a search in the DECS office in Malolos but this proved futile too.

This leaves us with Judge Natividad's testimony. Judge Natividad testified that he prepared and notarized the deed of donation. He further testified that there was a municipal council Resolution, signed in the Office of the Secretary and of the Mayor, accepting the donation and expressing gratitude to the donor. He furnished the municipal government, the DECS Division Office of Bulacan and the clerk of court of Sta. Maria a copy of the deed of donation.

DECS did not introduce in evidence the municipal council Resolution accepting the donation. There is also no proof that the donee communicated in writing its acceptance to the donor aside from the circumstance that DECS constructed the school during Isaias' lifetime without objection on his part. There is absolutely no showing that these steps were noted in both instruments.

Sufficiency of Proof of Loss

What mainly militates against DECS' claim is, as the Court of Appeals found, inadequate proof that DECS or the Municipality made a diligent search in the places where the deed of donation may likely be found and that the search was unsuccessful. Prior to the introduction of secondary evidence, a party must establish the existence and due execution of the instrument. After a party establishes the existence and due execution of the document, he must prove that the document was lost or destroyed.[18] The destruction of the instrument '

may be proved by any person knowing the fact. The loss may be shown by any person who knew the fact of its loss, or by any one who had made, on the judgment of the court, a sufficient examination in the place [or] places where the document or papers of similar









character are usually kept by the person in whose custody the document lost was, and has been unable to find it; or who has made any other investigation which is sufficient to satisfy the court that the instrument is indeed lost.[19]

Here, DECS allegedly made a search in the municipal building and in the DECS Division Office in Bulacan. The copies of the deed of donation furnished these offices were purportedly 'lost when these offices transferred to new locations. However, as the Court of Appeals correctly pointed out, Judge Natividad who claimed to have notarized the deed of donation failed to account for other copies of the deed, which the law strictly enjoins him to record, and furnish to other designated government offices.

The Notarial Law is explicit on the obligations and duties of a notary public. The law requires him to keep a notarial register where he shall record all his official acts as notary public. The law specifies the information that the notary public must enter in the notarial register. Failure to perform this duty results in the revocation of his commission as notary public. We quote the provisions of the Notarial Law pertinent to the case:

SECTION 245. Notarial register. - Every notary public shall keep a register to be known as the notarial register, wherein record shall be made of all his official acts as notary; and he shall supply a certified copy of such record, or any part thereof, to any person applying for it and paying the legal fees therefor.

Such register shall be kept in books to be furnished by the Attorney-General (Solicitor-General) to any notary public upon request and upon payment of the actual cost thereof, but officers exercising the functions of notaries public ex officio shall be supplied with the register at government expense. The register shall be duly paged, and on the first page, the Attorney-General (Solicitor-General) shall certify the number of pages of which the book consist[s].

SECTION 246. Matters to be entered therein. - The notary public shall enter in such register, in chronological order, the nature of each instrument executed, sworn to, or acknowledged before him, the person executing, swearing to, or acknowledging the instrument, the witnesses, if any, to the signature, the date of the execution, oath, or acknowledgment or the instrument, the fees collected by him for his services as notary in connection therewith, and;when the instrument is contract, he shall keep a correct copy thereof as part of his records , and shall likewise enter in said records a brief description of the substance thereof, and shall give to each entry a consecutive number, beginning with number one in each calendar year. The notary shall give to each instrument executed, sworn to, or acknowledged before him a number corresponding to the one in his register, and shall also state on the instrument the page or pages of his register on which the same is recorded. No blank line shall be left between entries.

x x x

At the end of each week the notary shall certify in his register the number of instruments executed, sworn to, acknowledged, or protested before him; or if none, such certificate shall show this fact.

A certified copy of each month's entries as described in this section and a certified copy of any instrument acknowledged before them shall within the first ten days of the month next following be forwarded by the notaries public to the clerk of the Court of First Instance of the province and shall be filed under the responsibility of such officer; Provided, that if there is no entry to certify for the month, the notary shall forward a statement to this effect in lieu of the certified copies herein required. (As amended by C.A. 72, Sec. 1.)

SECTION 247. Disposition of notarial register. - Immediately upon his notarial register being filled, and also within fifteen days after the expiration of his commission, unless reappointed, the notary public shall forward his notarial register to the clerk of the Court of First Instance of the province or of the City of , as the case may be, wherein he exercises his office, who shall examine the same and report thereon to the judge of the Court of First Instance. If the judge finds that no irregularity has been committed in the keeping of the register, he shall forward the same to the chief of the division of archives, patents, copyrights, and trade-marks . In case the judge finds that irregularities have been committed in the keeping of the register, he shall refer the matter to the fiscal of the province - and in the City of , to the fiscal of the city - for action and the sending of the register to the chief of the division of archives, patents, copyrights, and trade-marks shall be deferred until the termination of the case against the notary public. (Emphasis and underscoring supplied)

The Notarial Law mandates a notary public to record in his notarial register the necessary information regarding the instrument acknowledged before him. The Notarial Law also mandates the notary public to retain a copy of the instrument acknowledged before him when it is a contract.[20] The notarial register is a record of the notary public's official acts. Acknowledged instruments recorded in the notarial register are public documents.[21] If the instrument is not recorded in the notarial register and there is no copy in the notarial records, the presumption arises that the document was not notarized and is not a public document.[22]

DECS should have produced at the trial the notarial register where Judge Natividad as the notary public should have recorded the deed of donation. Alternatively, DECS should have explained the unavailability of the notarial register. Judge Natividad could have also explained why he did not retain a copy of the deed of donation as required by law. As the Court of Appeals correctly observed, there was no evidence showing that DECS looked for a copy from the Clerk of Court concerned or from the National Archives. All told, these circumstances preclude a finding that DECS or the Municipality made a diligent search to obtain a copy of the deed of donation.

In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. 'Preponderance of evidence means that the evidence as a whole adduced by one side is superior to that of the other. In other words, preponderance of evidence means the greater weight of the evidence - or evidence that outweighs the evidence of the adverse party. This Court is not satisfied that the evidence on the side of the party carrying the burden of proof is of preponderating weight.

Finally, DECS raises for the first time before this Court the issue on whether respondents' claim is barred by the equitable defense of laches. DECS did not raise this matter in the complaint or during the trial in the court below. DECS did not also raise this matter in its






appeal to the Court of Appeals. This Court cannot entertain this issue at this late stage, for to do so would plainly violate the basic rule of fair play, justice and due process.[23]

Much as we sympathize with the plight of the schoolchildren, we do not find reversible error in the Decision of the Court of Appeals. We cannot grant the relief DECS is seeking and disregard existing laws and jurisprudence. DECS, however, is not without remedy. The government can expropriate at any time the Donated Site, paying just compensation to respondents.

WHEREFORE, we DENY the petition. The Decision dated 25 September 2000 and the Resolution dated 29 December 2000 of the Court of Appeals in CA-G.R. CV No. 43929 are AFFIRMED.

SO ORDERED.



PROPERTY.cases.donation

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