Carinan vs. Cueto

A donation of money exceeding ₱5,000 must be made in writing to be valid; absent compliance with the formal requirements of Article 748 of the New Civil Code, a claim of gratuitous donation fails where the evidence demonstrates an expectation of repayment and the prevention of unjust enrichment requires reimbursement of the amounts advanced.

Esperanza Carinan and her late husband Jose acquired rights over a 180-square-meter parcel of land in Biñan, Laguna from Roberto Ventura in 1986 through a Deed of Assignment and Transfer of Rights with Assumption of Obligations, assuming the obligation to pay monthly amortizations to the Government Service Insurance System (GSIS). By 2005, unpaid amortizations threatened the cancellation of the conditional sale. Esperanza, then a widow, sought financial assistance from her brother Gavino Cueto. The respondents paid Esperanza’s total obligation of ₱785,680.37 to the GSIS, plus additional expenses for the transfer of title and property renovation. Esperanza surrendered Transfer Certificate of Title No. T-636804 to the respondents.

• The Acquisition and Financial Distress: Esperanza Carinan and her late husband Jose acquired rights over a parcel of land (Lot 24, Block 20, Juana Complex I, Biñan, Laguna) from Roberto Ventura in May 1986 via a Deed of Assignment and Transfer of Rights with Assumption of Obligations, assuming the duty to pay monthly amortizations to the GSIS. By 2005, substantial amortizations remained unpaid, placing the property at risk of forfeiture.
• The Financial Assistance: In October 2005, Esperanza, then widowed, sought help from her brother Gavino Cueto. Respondents paid ₱785,680.37 from their conjugal savings to settle Esperanza’s outstanding obligation with the GSIS. They also paid ₱141,501.75 for expenses related to the transfer of title from Roberto to Esperanza and for renovations on the residential house erected on the land. Esperanza surrendered TCT No. T-636804 to the respondents.
• The Alleged Agreement: Respondents alleged that Esperanza and her son Jazer undertook to execute a Deed of Absolute Sale in favor of the respondents once the title was transferred, subject to a three-year repurchase option allowing Esperanza to reimburse the expenses incurred.
• The Refusal and Litigation: In 2006, respondents demanded fulfillment of the alleged commitment to transfer the property. Esperanza refused, denying any agreement to sell or to repay, and claiming that Gavino acted out of sheer generosity and pity. Respondents filed a complaint for specific performance with damages, alternatively seeking reimbursement of ₱1,300,680.37 plus interest, moral damages, exemplary damages, and attorney’s fees.
• Lower Court Findings: The RTC found that the substantial amount involved precluded a gratuitous donation and indicated a loan arrangement, further evidenced by the retention of the TCT by respondents. The RTC ordered repayment of the actual amounts advanced plus interest and attorney’s fees, but denied specific performance. The CA affirmed these findings.

• Nature of the Transaction: Esperanza maintained that the payment of her GSIS arrears by respondents constituted a donation or gratuitous help extended by her brother out of generosity and pity, not a loan creating an obligation to repay. She argued that given her financial standing, she could not have intended to borrow such a substantial amount.
• Co-ownership: Esperanza claimed that co-ownership existed between the parties, implying shared equity in the property rather than a debtor-creditor relationship.
• Builder in Bad Faith: Esperanza argued that respondents were builders in bad faith, hence not entitled to reimbursement of improvement costs.
• Attorney’s Fees: Esperanza contended that the award of attorney’s fees was improper or excessive for lack of sufficient evidence.

• Loan vs. Donation: Respondents countered that the substantial amount of ₱785,680.37 could not have been given gratuitously, and the surrender of the TCT to respondents demonstrated an expectation of return and security for the advancement, negating any claim of donation.
• Unjust Enrichment: Respondents argued that Esperanza’s refusal to repay would result in unjust enrichment at their expense, as she retained the benefit of the property free of the GSIS obligation while respondents bore the financial burden.
• Procedural Bar: Respondents asserted that Esperanza’s claims of co-ownership and bad faith construction were new theories raised for the first time on appeal and were therefore barred, having not been pleaded in her answer before the trial court.

• Loan or Donation: Whether the payment by respondents of Esperanza’s obligations to the GSIS constituted a loan subject to repayment or a gratuitous donation.
• Co-ownership: Whether co-ownership existed between the parties.
• Builder in Bad Faith: Whether respondents were builders in bad faith, precluding recovery of improvement costs.
• Attorney’s Fees: Whether the award of attorney’s fees was proper and supported by evidence.

• Loan or Donation: The transaction was a loan, not a donation. The substantial amount involved negated any claim of pure liberality or generosity. Under Article 748 of the New Civil Code, a donation of money exceeding ₱5,000 requires written form; Esperanza failed to present any written contract evidencing a donation. The surrender of the TCT to respondents further indicated an intention to secure repayment rather than effect a gratuitous transfer. To allow Esperanza to retain the benefit without repayment would constitute unjust enrichment.
• Co-ownership: The claim of co-ownership could not be considered as it raised factual issues beyond the scope of a Rule 45 petition and was raised for the first time on appeal without having been pleaded in the answer below.
• Builder in Bad Faith: The allegation that respondents were builders in bad faith was likewise barred, having been raised for the first time on appeal and constituting a new theory that could not be entertained under the rules.
• Attorney’s Fees: The award of ₱100,000.00 in attorney’s fees was upheld pursuant to Article 2208 of the New Civil Code, the respondents having been compelled to litigate to protect their interests.

• Formal Requirements for Donation of Money (Article 748, NCC) — A donation of money or personal property exceeding ₱5,000 must be made in writing; otherwise, it is void. The simultaneous delivery of the thing or document representing the right donated is required only for oral donations of movables valued at ₱5,000 or less. In this case, the Court applied Article 748 to invalidate a claim of donation where no written instrument existed for the ₱785,680.37 advancement.
• Unjust Enrichment — The principle against unjust enrichment prevents a person from retaining benefits received at the expense of another without just cause or legal consideration. Where one party pays the obligations of another under circumstances indicating an expectation of repayment, and the recipient refuses to return the amounts advanced, equity demands reimbursement to prevent unjust enrichment.
• Rule on Raising New Issues on Appeal — Defenses not pleaded in the answer may not be raised for the first time on appeal. A party cannot fundamentally change the nature of the issues in the case on appeal where the adverse party had no opportunity to litigate the new theory in the lower courts.
• Scope of Rule 45 (Petition for Review on Certiorari) — Only questions of law may be raised in a petition for review on certiorari. Factual findings of the trial court, when affirmed by the Court of Appeals, are conclusive upon the Supreme Court and will not be disturbed when supported by substantial evidence.

• "A donation is a simple act of liberality where a person gives freely of a thing or right in favor of another, who accepts it (Article 725, New Civil Code, as amended). But when a large amount of money is involved, as in this case, this [c]ourt is constrained to take [Esperanza and Jazer’s] claim of generosity by [the respondents] with more than a grain of salt."
• "The main objective of the principle against unjust enrichment is to prevent one from enriching himself at the expense of another without just cause or consideration."
• "defenses not pleaded in the answer may not be raised for the first time on appeal. A party cannot, on appeal, change fundamentally the nature of the issue in the case. When a party deliberately adopts a certain theory and the case is decided upon that theory in the court below, he will not be permitted to change the same on appeal, because to permit him to do so would be unfair to the adverse party."

• Moreño-Lentfer v. Wolff, 484 Phil. 552 (2004) — Applied for the proposition that a donation must comply with mandatory formal requirements set forth by law for its validity, specifically that donations of money must be in writing when exceeding ₱5,000.
• Oropesa v. Oropesa, G.R. No. 184528, April 25, 2012 — Cited for the rule that factual findings of the trial court, when affirmed by the Court of Appeals, are entitled to great weight and respect and are deemed final and conclusive on the Supreme Court.
• Pena v. Tolentino, G.R. No. 155227-28, February 9, 2011 — Applied for the rule that defenses not pleaded in the answer may not be raised for the first time on appeal.
• Flores v. Lindo, Jr., G.R. No. 183984, April 13, 2011 — Cited regarding the principle against unjust enrichment.

• Article 748, New Civil Code — Governs the form required for donations of movables, mandating written form for donations of money exceeding ₱5,000.
• Article 725, New Civil 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.
• Article 2208, New Civil Code — Allows the recovery of attorney’s fees in cases where the defendant’s acts or omissions have compelled the plaintiff to litigate.
• Rule 45, Rules of Court — Governs petitions for review on certiorari to the Supreme Court, limiting review to questions of law.

Diosdado M. Peralta (Acting Chairperson) Martin S. Villarama, Jr. Estela M. Perlas-Bernabe Francis H. Jardeleza