ALMA ARIAS-SAAVEDRA, PLAINTIFF-APPELLANT, VS. AL BASIR ABDUL, MARLYN ABDUL & SPS. ADELAIDA ALBERTA PUAY & DIONISIO PUAY & THE REGISTER OF DEEDS FOR THE PROVINCE OF DAVAO ORIENTA…
PEREZ, J.:
Thus, this appeal.
The Facts
Plaintiff-appellant Alma Arias-Saavedra (appellant), as the only child and heir of the late spouses Francisco and Honorata Arias, filed on 12 March 2009 a Complaint[2] for Annulment of Deed of Donation, Deed of Sale, Reconveyance and/or Annulment of Title, Damages and Attorney’s Fees against defendants-appellees Spouses Al Basir Abdul and Marlyn Abdul, Spouses Adelaida Alberta Puay and Dionisio Puay, and the Register of Deeds as nominal party.
Appellant mainly alleged that she is the rightful owner of a parcel of land located at San Isidro, Davao Oriental covered by OCT No. P-10550 registered in the name of Honorata de Arias, by virtue of the Extra-Judicial Settlement with Deed of Donation[3] executed by her mother Honorata Alberta Arias (Honorata) in her favor. Thus, in her complaint, she sought to declare a second Deed of Donation[4] dated May 1999 executed by Honorata in favor of appellee Adelaida Puay (Adelaida) as null and void for being fictitious and for having been procured through fraud. Appellant argued that it was impossible for Honorata to donate the same parcel of land she had earlier donated to her considering that as early as 1994, Honorata had already divested herself of all interests in the subject property by donation in appellant’s favor being the only child.
She further alleged that since Honorata reserved a life-long usufruct as a condition of the donation, Honorata requested her niece Adelaida sometime in August 1996 to administer the disputed property since Adelaida was a resident of Davao Oriental where the property was located by executing a Special Power of Attorney in favor of Adelaida. Honorata eventually terminated Adelaida’s representation in her behalf by virtue of a Revocation of Power of Attorney[5] dated 21 March 1998.[6]
Appellant argued that Honorata could not have subsequently issued a second Deed of Donation as the latter had never revoked the earlier Deed of Donation she had executed in her favor. In the absence of revocation, appellant insists that the donation in her favor is valid, subsisting and had the legal effect of barring a subsequent donation.[7]
Moreover, appellant asserted that since the Deed of Donation dated May 1999 is null and void, the Deed of Absolute Sale[8] executed by appellee Adelaida in favor of appellee Spouses Al Basir Abdul and Marlyn Abdul is also null and void. Since Adelaida did not have any title or authority to alienate and/or dispose of the subject property, it follows that she cannot transmit any right to the Spouses Abdul.[9]
On the other hand, appellee Adelaida denied appellant’s allegations by countering in the main that the Deed of Donation executed by Honorata in favor of Adelaida and the Deed of Absolute Sale in favor of Al Basir Abdul and Marlyn Abdul are valid, thus making the spouses Abdul buyers in good faith. They also claimed that appellant was not the daughter nor was she legally adopted by the spouses Francisco Arias and Honorata.[10]
For their part, appellee Spouses Abdul defended by asserting that they are buyers in good faith and that in buying the property from Adelaida for P800,000.00, they relied on representations by Adelaida that the late spouses Arias had no issue and Adelaida is the owner of the disputed property.11
On 19 March 2011, appellant filed a Motion to Declare Defendants in Default[12] for their failure to submit pre-trail briefs despite notice and for failure to appear during the scheduled pre-trial hearing. In an Order[13] dated 7 September 2010, the trial court declared the appellees in default. Appellees’ motion for reconsideration was denied in an Order[14] dated 4 January 2011. Consequently, an ex-parte reception of evidence ensued on 24 August 2011, and appellant testified as the lone witness in support of her complaint.
On 13 January 2012, the Regional Trial Court rendered the appealed Decision dismissing appellant’s complaint, after finding that the revocation of the special of power of attorney in Adelaida’s favor did not prevent the subsequent donation to the latter, that appellant failed to prove fraud and Adelaida has the better right because she was first in possession of the disputed property based on Article 1544 in relation to Article 744 of the Civil Code.
Appellant’s motion for reconsideration primarily based on her claim of legitime as only child and heir was denied by the Court in an Order[15] dated 5 July 2012.
Aggrieved, appellant raises before Us the following assignment of errors:
THE HONORABLE COURT ERRED IN DISMISSING THE COMPLAINT AND HOLDING THAT THE SUBSEQUENT DEED OF DONATION IN FAVOR OF ADELAIDA WAS VALID RELYING SOLELY THAT THE REVOCATION OF THE POWER OF ATTORNEY CANNOT BE USED TO INVALIDATE THE EXECUTION OF A SUBSEQUENT DEED OF DONATION AND THAT PLAINTIFF-APPELLANT’S EVIDENCE FELL SHORT IN ESTABLISHING FRAUD AS TO THE EXECUTION OF THE SECOND DONATION;
THE HONORABLE COURT ERRED IN APPLYING ARTICLE 744 AND ARTICLE 1544 OF THE NEW CIVIL CODE RELATIVE TO DOUBLE DONATION AND HOLDING THAT DEFENDANT ADELAIDA SHOULD BE ADJUDGED AS FIRST IN POSSESSION SINCE BEFORE PLAINTIFF-APPELLANT COULD HAVE DISCOVERED THE EXISTENCE OF THE SUBSEQUENT DONATION, DEFENDANT ADELAIDA ALREADY CONVEYEDTHE SUBJECT PROPERTY TO DEFENDANTS AL BASIR ABDUL AND MARLYN ABDUL; AND
THE HONORABLE COURT ERRED IN HOLDING THAT IT CANNOT PASS UPON THE ISSUE OF PLAINTIFF-APPELLANT’S LEGITIME SINCE THE DEFENDANTS IN THEIR ANSWER WITH COUNTERCLAIM AND CROSSCLAIM THEY ALLEGED THAT PLAINTIFF-APPELLANT IS NOT A LEGITIMATE DESCENDANT OF THE LATE HONORATA ARIAS AND FRANCISCO ARIAS.
The Court’s Ruling
The appeal is meritorious.
Donation inter vivos executed by Honorata in favor of appellant, valid and subsisting
The facts are essentially not disputed in so far as the execution by the late Honorata of two different deeds of donation in favor of appellant and subsequently in favor of appellee Adelaida.
A review of the applicable law convinces this Court to uphold the validity of the Donation inter vivos executed by Honorata in favor of her daughter by virtue of the Extra-Judicial Settlement with Deed of Donation executed between Honorata and appellant on August 23, 1994 vis-à-vis appellee Adelaida who anchors her claim on the subsequent Deed of Donation executed by Honorata in her favor in May 1999.
Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another who accepts it.[16] Since the donation in this case was one made inter vivos, it was immediately operative and final.[17] As a mode of acquiring and transferring ownership, it results in an effective transfer of title over the property from the donor to the donee and the donation is perfected from the moment the donor knows of the acceptance by the donee. And once a donation is accepted, the donee becomes the absolute owner of the property donated.[18]
At the time the Extra Judicial Settlement with Deed of Donation was executed on August 23, 1994, appellant became the absolute owner of the subject property covered by OCT No. P-10550, with the named owner Honorata expressly reserving only a usufruct of the property as her means of support while she lives. When Honorata made a later donation in favor of Adelaida, she had no more title or interests in the property to convey to Adelaida for, by then, she had no more rights to dispose or transfer. Evidently, she could not give what she no longer had. Nemo dat quod non habet.[19]
The application by the court a quo of the rules on double donation, pertaining to Article 744 in relation to Article 1544,[20] is erroneous. The Extra Judicial Settlement with Deed of Donation, duly notarized and published,[21] coupled with appellant’s acceptance, unconditionally made effective the donation of the subject property by Honorata in appellant’s favor.
When the trial court considered Adelaida to have the better right because she was first in possession, it mistakenly equated the contract of donation with the ordinary contract of sale and misapplied Article 1544.
It is worthy to cite herein the concurring opinion of Justice Vitug in the case of Hemedes v. CA,[22] which pertinently set aside the application of the rule on double sales in an ordinary donation, as in the instant case. He particularly noted that donation is a mode of acquiring and transmitting ownership and thus, the donor must be the owner or have a real right of the property at the time of the donation for it to be effective. He stated:
…a donation would not be legally feasible if the donor has neither ownership nor real right that he can transmit to the donee. Unlike an ordinary contract, a donation, under Article 712, in relation to Article 725 of the Civil Code is also a mode of acquiring and transmitting ownership and other real rights by an act of liberality whereby a person disposes gratuitously that ownership or real right in favor of another who accepts it. It would be an inefficacious process if the donor would have nothing to convey at the time it is made.
Article 744 of the Civil Code states that the “donation of the same thing to two or more different donees shall be governed by the provisions concerning the sale of the same thing to two or more persons,” i.e., by Article 1544 of the same Code, as if so saying that there can be a case of “double donations” to different donees with opposing interest. Article 744 is a new provision, having no counterpart in the old Civil Code, that must have been added unguardedly. Being a mode of acquiring and transmitting ownership or other real rights, a donation once perfected would deny the valid execution of a subsequent inconsistent donation (unless perhaps if the prior donation has provided a suspensive condition which still pends when the later donation is made).
In sales, Article 1544, providing for the rules to resolve the conflicting rights of two or more buyers, is appropriate since the law does not prohibit but, in fact, sanctions the perfection of a sale by a non-owner, such as the sale of future things or a short sale, for it is only at the consummation stage of the sale, i.e., delivery of the thing sold, that ownership would be deemed transmitted to the buyer. In the meanwhile, a subsequent sale to another of the same thing by the same seller can still be a legal possibility. This rule on double sales finds no relevance in an ordinary donation where the law requires the donor to have ownership of the thing or the real right he donates at the time of its perfection (see Article 750, Civil Code) since a donation constitutes a mode, not just a title in an acquisition and transmission of ownership.
Article 712 of the Civil Code provides for the recognized modes of acquiring ownership –
Article 712. Ownership is acquired by occupation and by intellectual creation.
Ownership and other real rights over property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence of certain contracts, by tradition.
They may also be acquired by means of prescription.
Donation as a mode of acquiring ownership and transferring real rights in real property is distinguished from ordinary contracts such as a contract of sale which requires delivery in order to transfer ownership. Thus, under the law on sales, the execution of a contract of sale over real property does not by itself transfer the title and rights of the transferor until after actual or constructive delivery of the object of the transaction such that until such delivery only a right to compel the transferor to transfer and deliver to the transferee adheres to the latter. In Alcantara-Daus v. de Leon,[23] the Supreme Court, espousing that sale merely involves title and not a mode that transfers ownership, held:
While a contract of sale is perfected by mere consent, ownership of the thing sold is acquired only upon its delivery to the buyer. Upon the perfection of the sale, the seller assumes the obligation to transfer ownership and to deliver the thing sold, but the real right of ownership is transferred only “by tradition” or delivery thereof to the buyer.
Donation, unlike a contract of sale, immediately transfers ownership of the realty or interests therein upon acceptance of the donation.[24] Otherwise stated, upon acceptance by the donee, the donor is thus immediately relieved of any rights and interests that have been donated to the former and may recover them only upon a valid revocation of the donation.
Thus, it bears reiterating that Honorata could not have donated the same property she had earlier donated to appellant because ownership thereof has already been vested in appellant upon her acceptance of the donation. Thus, it is clearly error for the court a quo to adjudge Adelaida to have a better right simply because she was first in possession of the subject property as shown by her conveyance of the subject property to her co-appellees, spouses Abdul, before appellant discovered the existence of the second donation.
The other errors assigned by appellant need not occupy this Court’s further attention.
We agree with the trial court’s ruling that the revocation of the power of attorney granted to Adelaida does not or cannot invalidate the execution of the subsequent deed of donation in the latter’s favor, and that the appellant’s evidence fell short in proving fraud as to the execution of the second donation. That said however, the second donation still cannot prevail over the first donation in favor of appellant which as discussed is effective and final from the time the Extra Judicial Settlement with Deed of Donation was accepted by appellant.
Appellees, Spouses Abdul, are not purchasers in good faith
Spouses Abdul’s claim that they are purchasers in good faith and that the title transferred to them by appellee Adelaida should be respected is not supported by law and the evidence.
A purchaser in good faith is one who buys property without notice that some other person has a right to or interest in such property and pays its fair price before he has notice of the adverse claims and interest of another person in the same property. The honesty of intention which constitutes good faith implies a freedom from knowledge of circumstances which ought to put a person on inquiry.[25] As enunciated by the Supreme Court in Lim vs. Chuatoco:[26]
…good faith consists in the possessor’s belief that the person from whom he received the thing was the owner of the same and could convey his title. Good faith, while it is always to be presumed in the absence of proof to the contrary, requires a well founded belief that the person from whom title was received was himself the owner of the land, with the right to convey it. There is good faith where there is an honest intention to abstain from taking any unconscientious advantage from another. Otherwise stated, good faith is the opposite of fraud and it refers to the state of mind which is manifested by the acts of the individual concerned.
In a catena of cases, the Supreme Court has settled the rule that every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go beyond the certificate to determine the condition of the property. Where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defects or inchoate right that may subsequently defeat his right thereto.[27]
However, when a person deals with registered land through someone who is not the registered owner, as in the instant case, he is expected to look behind the certificate of title and examine all the factual circumstances, in order to determine if the vendor has the capacity to transfer any interest in the land. He has the duty to ascertain the identity of the person with whom he is dealing and the latter’s legal authority to convey.[28]
As per their own allegations, the spouses Abdul heavily relied on the words of Adelaida that she is the owner-donee of the subject property and that the registered owner Honorata died without issue nor left any creditors, thus, making her the absolute owner of the property by virtue of the Deed of Donation executed in May 1999.[29] Even if the donation inter vivos made by Honorata in favor of appellant was not registered or annotated in the original certificate of title,[30] the spouses Abdul should have not solely relied on the apparently clean title in verifying the real status of ownership of the subject property considering that the property even then remained in the name of the deceased Honorata and the Deed of Donation in favor of Adelaida had not also been registered on the certificate of title. The knowledge that they were buying the property from a person (Adelaida) who is not the registered owner, or who is not even a compulsory heir of the deceased owner, and whose only claim of ownership is anchored on a deed of donation which is likewise not registered, should have inevitably put them on guard as to the provenance and validity of the title being disposed in their favor.
The law particularly requires a higher degree of prudence from one who buys from a person who is not the registered owner, although the land object of the transaction is registered. It bears stressing that when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation, such party is expected to examine not only the certificate of title but all factual circumstances necessary for him to determine if there are any flaws in the title of the transferor, or in his capacity to transfer the land.[31]
Moreover, the burden of proving the status of a purchaser in good faith lies upon one who asserts that status and this onus probandi cannot be discharged by mere invocation of the legal presumption of good faith.[32] There is nothing in the records that would convince us that the spouses Abdul were buyers in good faith, particularly since the appellees were unable to present evidence for having been declared in default at the trial below. On this point, the unrebutted evidence consists of appellant’s testimony that she informed appellee Al Basir Abdul (Al Basir) in a conference at the Barangay Hall of San Isidro, Davao Oriental that the subject property was not for sale as she is the daughter of the deceased spouses Arias.[33] This should have made the spouses Abdul more cautious in their intention to buy the subject property from Adelaida.
Having failed to discharge such burden of proving the status of a purchaser in good faith and in the face of preponderant evidence to the contrary, the spouses Abdul are constrained from invoking any right over the subject property but should as a matter of law and fairness be entitled to the return of what they have paid for the property.
All told, this Court finds that appellant Alma Arias-Saavedra has title and ownership of the subject property by reason of the donation made in her favor under the Extra Judicial Settlement with Deed of Donation on August 23, 1994.
WHEREFORE, the appeal is GRANTED. The 13 January 2012 Decision of the Regional Trial Court (RTC) of Lupon, Davao Oriental, Branch 32, is hereby REVERSED and SET ASIDE.
Accordingly, a new judgment is rendered as follows:
- Declaring Alma Arias-Saavedra as the lawful owner of the property covered by OCT No. P-10550 by virtue of the Extra Judicial Settlement with Deed of Donation on August 23, 1994 between her and Honorata Alberta Arias;
- Declaring the Second Deed of Donation of Honorata Alberta Arias in favor of appellee Adelaida Alberta Puay in May 1999 as NULL and VOID;
- Declaring the Deed of Sale dated 12 May 2002 between the spouses Adelaida and Dionisio Puay and spouses Al Basir and Marlyn Abdul as NULL and VOID; and directing Adelaida Alberta Puay to return to the spouses Al Basir and Marlyn Abdul the purchase price of P800,000.00 with legal interest from the date of sale until paid in full.
- No pronouncement as to costs.
SO ORDERED.
Camello, J.,Ch., and Inting, JJ., concur.
[1] Rollo, pp. 32-43.
[2] Records, pp. 2-12.
[3] Folder of Exhibits, Ex. “F”, pp. 16-17.
[4] Folder of Exhibits, Ex. “M”, p. 29.
[5] Folder of Exhibits, Ex. “K”, p. 25.
[6] Rollo, p. 32-33.
[7] Id. at 33.
[8] Folder of Exhibits, Ex. “L”, pp. 27-28.
[9] Rollo, p. 33.
[10] Records, pp. 50-53.
[11] Records, pp. 31-48
[12] Id. at 72-75.
[13] Id. at 99-100.
[14] Id. at 178-179.
[15] Id. at 313-314.
[16] Article 725, Civil Code of the Philippines.
[17] Heirs of William Sevilla v. Sevilla, G.R. No. 150179, 30 April 2003.
[18] Del Rosario v Ferrer, G.R. No. 187056, 20 September 2010.
[19] Ibid.
[20] Art. 744. Donations of the same thing to two or more different donees shall be governed by the provisions concerning the sale of the same thing to two or more different persons.
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.
[21] Folder of Exhibits, Ex. H-1, p. 20.
[22] Hemedes v. CA, G.R. No. 107132, 8 October 1999.
[23] G.R. No. 149750, 16 June 2003.
[24] Article 725, Civil Code of the Philippines.
[25] Sigaya v. Mayuga, G.R. No. 143254, 18 August 2005.
[26] No. 161861, 11 March 2005.
[27] Spouses Chua v. Soriano, G.R. No. 150066, 13 April 2007.
[28] Ibid.
[29] Records, p. 35.
[30] Ibid.
[31] Supra note 27.
[32] Supra note 25.
[33] TSN, 24 August 2011, pp. 14-15.