Abellana vs. Ponce

An oral donation of immovable property is void for non-compliance with the formalities required by Article 749 of the Civil Code, which mandates that donations of immovable property be made in a public document specifying the property donated and the charges the donee must satisfy, with acceptance made in the same deed or in a separate public document. Because a void donation is legally inexistent, an action for its declaration does not prescribe, and the donor may recover the property from the donee notwithstanding the donor's original intent to give.

Felomina Abellana, a spinster pharmacist, was the aunt of private respondent Lucila Ponce. Felomina had a practice of purchasing properties and giving them to her nieces, having previously bought lots for her niece Zaida Bascones. The dispute concerns a 44,297 square meter agricultural lot in Los Angeles, Butuan City, originally covered by Original Certificate of Title No. P-27 under Homestead Patent No. V-1551. The Civil Code provisions on donations (Articles 748 and 749) and implied trusts (Article 1448) supply the legal framework for determining the validity of the transfer and the nature of the relationship between the parties.

Felomina Abellana, a spinster pharmacist and aunt of private respondent Lucila Ponce, purchased on July 15, 1981 a 44,297 square meter agricultural lot from the late Estela Caldoza-Pacres with the intention of giving it to her niece. In the deed of sale, Lucila was designated as the buyer of Lot 3, Pcs-10-000198, covered by Original Certificate of Title No. P-27, Homestead Patent No. V-1551, located at Los Angeles, Butuan City. The total consideration was P16,500.00, but only P4,500.00 was stated in the deed upon the request of the seller. Felomina subsequently applied for the issuance of title in her niece's name, and on April 28, 1992, Transfer Certificate of Title No. 2874 was issued in the name of Lucila. The title, however, remained in Felomina's possession, and she developed the lot through Juanario Torreon and paid the real property taxes thereon.

The relationship between Felomina and respondent spouses Romeo and Lucila Ponce later turned sour. The latter allegedly became disrespectful and ungrateful, hurling insults at Felomina and even attempting to hurt her physically. Felomina then filed the instant case for revocation of implied trust to recover legal title over the property. The respondent spouses, for their part, claimed that the purchase price was only P4,500.00 and that they paid it, with the payment and signing of the deed taking place in the office of Atty. Teodoro Emboy in the presence of the seller and her siblings. They further claimed that Juanario approached Lucila a year later and volunteered to till the lot, and that in 1987 they consented to Felomina's proposal to develop and lease the lot while they shouldered the real property taxes. When Lucila learned that a certificate of title in her name had been issued, she confronted Felomina, who claimed she had already given her the title; thinking she had misplaced it, Lucila executed an affidavit of loss, which led to the issuance of another certificate of title in her name.

The trial court found that an implied trust existed between Felomina and Lucila, ordering the conveyance of the lot to Felomina. On appeal, the Court of Appeals reversed, holding that Felomina failed to prove the existence of an implied trust and that even assuming she paid the purchase price, the situation fell within the exception in Article 1448 raising a disputable presumption that the property was purchased as a gift to Lucila, whom Felomina considered as her own daughter.

The Supreme Court found that it was Felomina, not Lucila, who truly purchased the lot from Estela. Felomina's positive and consistent testimony that she was the real vendee was deemed credible, corroborated by Aquilino Caldoza, brother of the vendor and witness to the deed of sale, who categorically declared that Felomina was the buyer and paid the purchase price. Juanario denied that he approached Lucila to till the land, stating that it was Felomina who recruited him as caretaker. Felomina's possession of the transfer certificate of title, tax declaration, receipts of real property taxes in her name for various years, and the survey plan further bolstered her claim.

• Implied Trust: Felomina argued that an implied trust existed between her and Lucila under Article 1448 of the Civil Code, with Felomina as trustor and Lucila as trustee, such that Lucila was merely holding the lot for Felomina's benefit.
• Revocation of Trust: Felomina maintained that the implied trust, having been created without the consent of the trustee and without any condition, could be revoked, entitling her to recover legal title over the property.
• Payment of Purchase Price: Felomina contended that she, not the respondent spouses, paid the purchase price of the lot, and that the designation of Lucila as buyer in the deed was merely to effectuate her intention to give the property to her niece.

• Payment of Purchase Price: Respondent spouses claimed that the purchase price of the lot was only P4,500.00 and that they paid the same, with the payment and signing of the deed of sale taking place in the office of Atty. Teodoro Emboy in the presence of the seller and her siblings.
• Ownership and Possession: They argued that Juanario approached Lucila and volunteered to till the lot, to which she agreed, and that in 1987 the spouses consented to Felomina's proposal to develop and lease the lot while they shouldered the real property taxes.
• Demand for Rentals: The spouses claimed that in 1990 they demanded rental from Felomina, who refused to pay because her agricultural endeavor was allegedly not profitable.
• Affidavit of Loss: When Lucila learned that a certificate of title in her name had been issued, she confronted Felomina, who claimed she had already given her the title; thinking she had misplaced it, Lucila executed an affidavit of loss, which led to the issuance of another certificate of title in her name.

• Ownership of the Lot: Whether Felomina or respondent spouses is the lawful owner of the controverted lot, which requires determining who paid the purchase price.
• Nature of the Transaction: Whether the transaction between Felomina and Lucila constituted an implied trust under Article 1448 of the Civil Code or a donation subject to the formalities of Articles 748 and 749.
• Applicability of the Article 1448 Exception: Whether the second sentence of Article 1448, raising a disputable presumption of a gift in favor of a child or one to whom the payor stands in loco parentis, applies to the present case.
• Award of Attorney's Fees and Litigation Expenses: Whether the trial court's award of attorney's fees and litigation expenses should be sustained.
• Proper Remedy for Conveyance: Whether the trial court properly ordered respondent spouses to execute a deed of conveyance, or whether the proper remedy is the divestment of title under Section 10(a), Rule 39 of the Revised Rules of Civil Procedure.

• Ownership of the Lot: Felomina. The Court found that it was Felomina, not Lucila, who truly purchased the lot from Estela, based on Felomina's credible testimony, corroborated by witness Aquilino Caldoza and documentary evidence.
• Nature of the Transaction: Void donation. The transaction between Felomina and Lucila was an oral donation of immovable property not embodied in a public instrument as required by Article 749 of the Civil Code, rendering the donation void.
• Applicability of the Article 1448 Exception: No. The exception does not apply because it was not established that Felomina stood as a substitute parent of Lucila, and even assuming she did, the donation is still void because the transfer and acceptance were not embodied in a public instrument.
• Award of Attorney's Fees and Litigation Expenses: Deleted. The awards were deleted for lack of basis, as no evidence was presented in support of said claims and the trial court made the awards without stating any justification in the ratio decidendi.
• Proper Remedy for Conveyance: The proper remedy is provided under Section 10(a), Rule 39 of the Revised Rules of Civil Procedure, which allows the court, in lieu of directing a conveyance, to divest the title of any party and vest it in others.

• Ownership of the Lot: The Court found that Felomina's positive and consistent testimony that she was the real vendee of the lot was credible to debunk the contrary claim of respondent spouses, noting that the lone testimony of a witness, if credible, is sufficient. Aquilino Caldoza, brother of the vendor and one of the witnesses to the deed of sale, categorically declared that Felomina was the buyer and the one who paid the purchase price to her sister Estela. Juanario, who was allegedly hired by Lucila to develop the lot, vehemently denied that he approached and convinced Lucila to let him till the land, stating that it was Felomina who recruited him to be the caretaker. Felomina's possession of the transfer certificate of title, tax declaration, receipts of real property taxes in her name, and the survey plan from the time of their issuance up to the present further bolstered the finding that she bought the lot.

• Nature of the Transaction: The Court held that what transpired between Felomina and Lucila was a donation of an immovable property which was not embodied in a public instrument as required by Article 749 of the Civil Code. Being an oral donation, the transaction was void. Even if Felomina enjoyed the fruits of the land with the intention of giving effect to the donation after her demise, the conveyance is still a void donation mortis causa for non-compliance with the formalities of a will. No valid title passed regardless of the intention of Felomina to donate the property to Lucila, because the naked intent to convey without the required solemnities does not suffice for gratuitous alienations, even as between the parties inter se. Unlike ordinary contracts, which are perfected by the concurrence of consent, object, and cause pursuant to Article 1318, solemn contracts like donations are perfected only upon compliance with the legal formalities under Articles 748 and 749. Absent the solemnity requirements for validity, the mere intention of the parties does not give rise to a contract. The oral donation is therefore legally inexistent, and an action for the declaration of the inexistence of a contract does not prescribe. Hence, Felomina can still recover title from Lucila.

• Applicability of the Article 1448 Exception: The Court held that Article 1448 on implied trust finds no application in the instant case. The concept of implied trusts is that from the facts and circumstances of a given case, the existence of a trust relationship is inferred in order to effect the presumed intention of the parties. One of the recognized exceptions to the establishment of an implied trust is where a contrary intention is proved, as in the present case. From Felomina's own testimony, she wanted to give the lot to Lucila as a gift, and to her mind, the execution of a deed with Lucila as the buyer and the subsequent issuance of title in the latter's name were the acts that would effectuate her generosity. Felomina evidently displayed her unequivocal intention to transfer ownership of the lot to Lucila and not merely to constitute her as a trustee thereof. It was only when their relationship soured that she sought to revoke the donation on the theory of implied trust, though there is nothing to revoke because the donation was never perfected. The second sentence of Article 1448, raising a disputable presumption of a gift in favor of a child or one to whom the payor stands in loco parentis, is also not applicable because it was not established that Felomina stood as a substitute parent of Lucila, and even assuming she did, the donation is still void because the transfer and acceptance was not embodied in a public instrument. The provision merely raises a presumption that the conveyance was a gift but nothing therein exempts the parties from complying with the formalities of a donation.

• Award of Attorney's Fees and Litigation Expenses: The Court deleted the trial court's award of attorney's fees and litigation expenses for lack of basis. Aside from the allegations in the complaint, no evidence was presented in support of said claims, and the trial court made these awards in the dispositive portion of its decision without stating any justification therefor in the ratio decidendi.

• Proper Remedy for Conveyance: The Court held that the proper remedy is provided under Section 10(a), Rule 39 of the Revised Rules of Civil Procedure, which provides that if real or personal property is situated within the Philippines, the court in lieu of directing a conveyance thereof may by an order divest the title of any party and vest it in others, which shall have the force and effect of a conveyance executed in due form of law.

• Formalities of Donation of Immovable Property — Under Article 749 of the Civil Code, for a donation of immovable property to be valid, it must be made in a public document specifying the property donated and the value of the charges which the donee must satisfy; acceptance may be made in the same deed or in a separate public document. The Court applied this doctrine to hold that the oral donation between Felomina and Lucila was void for non-compliance with these mandatory formalities.

• Solemn Contracts vs. Ordinary Contracts — Unlike ordinary contracts, which are perfected by the concurrence of consent, object, and cause under Article 1318, solemn contracts like donations are perfected only upon compliance with the legal formalities under Articles 748 and 749. Absent the solemnity requirements for validity, the mere intention of the parties does not give rise to a contract. The Court applied this doctrine to conclude that the oral donation was legally inexistent.

• Imprescriptibility of Action to Declare Inexistence of Contract — An action for the declaration of the inexistence of a contract does not prescribe. The Court applied this doctrine to hold that Felomina could still recover title from Lucila notwithstanding the passage of time since the oral donation was legally inexistent.

• Implied Trust and the Contrary Intention Exception — Under Article 1448, an implied trust arises when property is sold and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. One of the recognized exceptions to the establishment of an implied trust is where a contrary intention is proved. The Court applied this doctrine to find that Felomina's unequivocal intention to give the lot to Lucila as a gift negated the existence of an implied trust.

• In Loco Parentis Exception Under Article 1448 — The second sentence of Article 1448 raises a disputable presumption of a gift in favor of a child, legitimate or illegitimate, of the one paying the price of the sale, and the same presumption arises where the property is given to a person to whom the payor stands in loco parentis or as a substitute parent. The Court held that this exception did not apply because it was not established that Felomina stood as a substitute parent of Lucila, and even assuming she did, the donation was still void for non-compliance with the formalities of a donation.

• "Being an oral donation, the transaction was void." — This passage states the core ratio decidendi: the donation of immovable property between Felomina and Lucila was void for failure to comply with the formal requirements of Article 749 of the Civil Code.

• "No valid title passed regardless of the intention of Felomina to donate the property to Lucila, because the naked intent to convey without the required solemnities does not suffice for gratuitous alienations, even as between the parties inter se." — This passage articulates the principle that the donor's intent to give does not cure the absence of the required formalities for a valid donation of immovable property.

• "The oral donation in the case at bar is therefore legally inexistent and an action for the declaration of the inexistence of a contract does not prescribe." — This passage establishes the legal consequence of the void donation: because the contract is legally inexistent, the action to declare its inexistence does not prescribe, allowing Felomina to recover the property.

• "Said presumption merely raised a presumption that the conveyance was a gift but nothing therein exempts the parties from complying with the formalities of a donation." — This passage clarifies that the in loco parentis exception under Article 1448 does not dispense with the formal requirements of a valid donation.

• Nazareno vs. Court of Appeals, G.R. No. 138842, 18 October 2000, 343 SCRA 637 — Cited for the principle that the lone testimony of a witness, if credible, is sufficient to establish a fact. The Court relied on this to credit Felomina's testimony that she was the real vendee of the lot.

• Dauden-Hernaez vs. De los Angeles, G.R. No. L-27010, 30 April 1969, 27 SCRA 1276 — Cited for the principle that when the law requires a contract to be in some form for its validity, that requirement is absolute and indispensable, and its non-observance renders the contract void and of no effect.

• Bagnas vs. Court of Appeals, G.R. No. 38498, 10 August 1989, 176 SCRA 159 — Cited for the proposition that an oral donation of immovable property is void for non-compliance with the formalities of Article 749 of the Civil Code.

• Pershing Tan Queto vs. Court of Appeals, G.R. No. L-35648, 27 February 1987, 148 SCRA 54 — Cited for the proposition that a donation mortis causa that fails to comply with the formalities of a will is void.

• Felix Gochan and Sons Realty Corporation vs. Heirs of Raymundo Baba, G.R. No. 138945, 19 August 2003, 409 SCRA 306 — Cited for the principle that an action for the declaration of the inexistence of a contract does not prescribe.

• Padilla vs. Court of Appeals, 152 Phil. 548 (1973) — Cited for the concept of implied trusts, that from the facts and circumstances of a given case, the existence of a trust relationship is inferred in order to effect the presumed intention of the parties.

• Morales vs. Court of Appeals, G.R. No. 117228, 19 June 1997, 274 SCRA 282 — Cited for the exception to the establishment of an implied trust where a contrary intention is proved, and for the in loco parentis exception under Article 1448.

• Diamonon vs. Department of Labor and Employment, 384 Phil. 15 (2000) — Cited for the principle that the Court is clothed with ample authority to address issues in order to arrive at a just decision that completely disposes of the controversy.

• Cometa vs. Court of Appeals, G.R. No. 141855, 6 February 2001, 351 SCRA 294 — Cited for the principle that rules of procedure are mere tools designed to facilitate the attainment of justice and must be applied in a way that equitably and completely resolve the rights and obligations of the parties.

• Siguan vs. Lim, 376 Phil. 840 (1999) — Cited for the principle that awards of attorney's fees and litigation expenses must be supported by evidence and justification in the ratio decidendi.

• Article 749, Civil Code — Requires that donations of immovable property be made in a public document specifying the property donated and the value of the charges which the donee must satisfy, with acceptance made in the same deed or in a separate public document. The Court applied this provision to hold the oral donation between Felomina and Lucila void.

• Article 748, Civil Code — Governs the formalities for donations of movable property, requiring oral donations to be accompanied by simultaneous delivery and written form for donations exceeding five thousand pesos. The Court cited this provision in distinguishing solemn contracts from ordinary contracts.

• Article 1318, Civil Code — Lists the requisites for the existence of a contract: consent of the contracting parties, object certain which is the subject matter of the contract, and cause of the obligation which is established. The Court cited this provision to distinguish ordinary contracts from solemn contracts like donations.

• Article 1448, Civil Code — Defines implied trust when property is sold and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property, with an exception raising a disputable presumption of a gift in favor of a child or one to whom the payor stands in loco parentis. The Court held this provision inapplicable because Felomina's contrary intention was proved and the donation was void for lack of formalities.

• Section 10(a), Rule 39, Revised Rules of Civil Procedure — Provides that if real or personal property is situated within the Philippines, the court in lieu of directing a conveyance thereof may by an order divest the title of any party and vest it in others, which shall have the force and effect of a conveyance executed in due form of law. The Court applied this provision to order the Register of Deeds to cancel TCT No. T-2874 and issue a new one in Felomina's name.

• Davide, Jr., C.J. (Chairman)
• Quisumbing, J.
• Azcuna, J.