Unchuan vs. Lozada

A deed of donation of immovable property that is not duly notarized, bears material alterations unaccounted for by the proponent, and was not filed with the Notarial Records Division is void for non-compliance with Article 749 of the Civil Code, which requires that donations of immovable property be made in a public document. The nullity of the donation renders any claim of laches moot, since no right exists from which delay in enforcement may be reckoned.

Sisters Anita Lozada Slaughter and Peregrina Lozada Saribay were the registered co-owners of Lot Nos. 898-A-3 and 898-A-4 in Cebu City, covered by TCT Nos. 53258 and 53257. Both sisters resided in the United States. Their nephew, Antonio J.P. Lozada, purchased the lots from them, with the purchase price of US$367,000 (approximately ₱10,000,000) advanced by their brother, Dr. Antonio Lozada, an American citizen based in Long Beach, California. Dr. Lozada and Antonio planned to eventually infuse the lots into the capitalization of Damasa Corporation, in which they would hold 40% and 60% stakes, respectively. Petitioner Marissa R. Unchuan claimed a prior donation from Anita over an undivided share in the same lots, predating the sale.

Sisters Anita Lozada Slaughter and Peregrina Lozada Saribay were the registered co-owners of Lot Nos. 898-A-3 and 898-A-4 in Cebu City, covered by TCT Nos. 53258 and 53257. Both based in the United States, the sisters sold the lots to their nephew, Antonio J.P. Lozada, under a Deed of Sale dated March 11, 1994. Armed with a Special Power of Attorney from Anita, Peregrina went to the house of their brother, Dr. Antonio Lozada, in Long Beach, California. Dr. Lozada agreed to advance the purchase price of US$367,000 (approximately ₱10,000,000) for Antonio. The Deed of Sale was notarized and authenticated at the Philippine Consul's Office, after which Dr. Lozada forwarded the deed, the special power of attorney, and the owners' copies of the titles to Antonio in the Philippines. Upon receipt, Antonio recorded the sale with the Register of Deeds of Cebu, and TCT Nos. 128322 and 128323 were issued in his name.

Pending registration of the deed, petitioner Marissa R. Unchuan caused the annotation of an adverse claim on the lots, asserting that Anita had donated an undivided share to her under an unregistered Deed of Donation dated February 4, 1987. Antonio and Anita filed a case for quieting of title with preliminary injunction against Marissa, while Marissa filed a separate action to declare the Deed of Sale void and to cancel the new TCTs. The cases were consolidated and tried jointly.

At trial, respondents presented a notarized and authenticated sworn statement and a videotape in which Anita denied having donated land to Marissa. Dr. Lozada testified that he advanced payment for Antonio in preparation for forming Damasa Corporation, where they would hold 40% and 60% stakes, respectively, with the lots to be infused as capital. A witness for respondents, Lourdes G. Vicencio, confirmed that she had been renting the ground floor of Anita's house since 1983 and tendering rentals to Antonio. Marissa, for her part, testified that she accompanied Anita to the office of Atty. Cresencio Tomakin for the signing of the Deed of Donation, which she kept in a safety deposit box while continuing to funnel monthly rentals to Peregrina's account.

Petitioner's witness, Dr. Cecilia Fuentes, testified on Peregrina's medical records, interpreting them to show that it was physically impossible for Peregrina to have signed the Deed of Sale on March 11, 1994, when she was reportedly suffering from edema. Peregrina died on April 4, 1994. The RTC initially ruled in favor of respondents on June 9, 1997, but reversed itself on April 5, 1999, crediting Peregrina's medical records. On July 6, 2000, the RTC reinstated the original decision, minus the damages. The Court of Appeals affirmed with modification on February 23, 2006, restoring attorney's fees and litigation expenses. The appellate court found that the notarized Deed of Sale enjoyed the presumption of regularity, declared Antonio a buyer in good faith, and nullified the Deed of Donation for lack of proper notarization.

• Due Process: Petitioner contended that the Court of Appeals violated her right to due process when it failed to rule on the validity of the sale between the Lozada sisters and Antonio, specifically her third assigned error.
• Alien Land Ownership: Petitioner found it anomalous that Dr. Lozada, an American citizen, paid for the lots and accused Antonio of being a mere dummy, arguing that the sale violated public policy prohibiting aliens from owning lands in the Philippines.
• Factual Review: Petitioner urged the Court to review the conflicting factual findings of the trial and appellate courts regarding Peregrina's medical condition on March 11, 1994, and Dr. Lozada's financial capacity to advance payment for Antonio.
• Validity of Donation: Petitioner assailed the Court of Appeals' ruling nullifying the Deed of Donation in her favor.
• Laches: Petitioner challenged the appellate court's holding that her case was barred by laches.
• Hearsay: Petitioner challenged the admissibility of Anita's videotaped statement, arguing that Anita was not presented as a witness.

• Procedural Defect: Respondents prayed for dismissal of the petition for petitioner's failure to furnish the Register of Deeds of Cebu City with a copy thereof, in violation of Sections 3 and 4, Rule 45 of the Rules of Court.
• Authenticity of Medical Records: Respondents averred that Peregrina's unauthenticated medical records were merely falsified to make it appear that she was confined in the hospital on the day of the sale.
• Credibility of Expert Witness: Respondents questioned the credibility of Dr. Fuentes, who was neither presented in court as an expert witness nor professionally involved in Peregrina's medical care.
• Validity of Donation: Respondents impugned the validity of the Deed of Donation in favor of Marissa.
• Due Process: Respondents asserted that the Court of Appeals did not violate petitioner's right to due process, as it resolved collectively all factual and legal issues on the validity of the sale.

• Validity of Sale and Alien Land Ownership: Whether the Court of Appeals erred in upholding the RTC decision declaring Antonio J.P. Lozada the absolute owner of the questioned properties, notwithstanding the contention that the sale violated public policy on alien land ownership.
• Due Process: Whether the Court of Appeals violated petitioner's right to due process by failing to specifically resolve all assigned errors.
• Laches: Whether petitioner's case is barred by laches.
• Validity of the Deed of Donation: Whether the Court of Appeals erred in holding that the Deed of Donation executed in favor of petitioner is void.
• Hearsay Evidence: Whether the Court of Appeals erred in not excluding Anita Lozada's videotaped statement as hearsay evidence.

• Validity of Sale and Alien Land Ownership: No. The sale was valid; at no point were the lots registered in Dr. Lozada's name, nor was it contemplated that they be under his control, as they were to be infused as capital into Damasa Corporation, a Philippine national under RA No. 7042.
• Due Process: No. Mere failure by the appellate court to specify all contentious issues raised is not sufficient to render its decision contrary to the requirements of the Constitution, so long as it contains the necessary findings of fact to warrant its conclusions.
• Laches: Rendered moot. It was unnecessary to rule on laches, as the void Deed of Donation created no right from which delay in enforcing a claim could be reckoned.
• Validity of the Deed of Donation: Yes, the deed is void. It was not duly notarized, bore material alterations unaccounted for by the proponent, and was not filed with the Notarial Records Division, failing the requirements of Article 749 of the Civil Code.
• Hearsay Evidence: The videotaped statement was excluded, but not as hearsay. While an affidavit is hearsay where its maker does not take the witness stand, party admissions are admissible even if hearsay; however, the videotape was excluded for failure to authenticate it as object evidence under the Rules.

• Validity of Sale and Alien Land Ownership: The notarized and authenticated Deed of Sale enjoyed the presumption of regularity and was admissible without further proof of due execution. The Court found nothing to show that the sale violated the public policy prohibiting aliens from owning lands in the Philippines. Even though Dr. Lozada advanced the money, the lots were never registered in his name, nor was it contemplated that they be under his control. The lots were to be included as capital of Damasa Corporation, where Antonio and Dr. Lozada would hold 60% and 40% of the shares, respectively. Under Section 3 of RA No. 7042, a corporation organized under Philippine laws with at least 60% of its capital stock owned by Filipino citizens is considered a Philippine national and may acquire disposable lands. Petitioner also failed to present proof to belie Antonio's capacity to pay. The Court further found no reason to overturn the factual findings of both the RTC and the CA on Peregrina's physical ability to execute the Deed of Sale. The medical records submitted by petitioner were unauthenticated, as a certification from the hospital's Health Information Management manager denied having certified or mailed copies of Peregrina's records to the Philippines. Moreover, records showed that on March 9, 1994, two days before the sale, Peregrina was able to issue checks for her attorney's fees and hospital bills, which petitioner never disputed at trial.

• Due Process: Faithful adherence to Section 14, Article VIII of the 1987 Constitution requires that parties be informed of how a case was decided, with an explanation of the factual and legal reasons for the court's conclusions. However, mere failure by the appellate court to specify in its decision all contentious issues raised by the appellant is not sufficient to hold the decision contrary to the requirements of law and the Constitution. So long as the decision contains the necessary findings of fact to warrant its conclusions, the appellate court cannot be declared in error for withholding specific findings on the evidence for the defense. The Court applied the legal presumption that official duty has been regularly performed and that all matters within an issue were laid before and passed upon by the court.

• Laches: Because the Deed of Donation was declared void, it created no right from which delay in making any claim could be reckoned. The issue of laches was therefore rendered academic and unnecessary to resolve.

• Validity of the Deed of Donation: Article 749 of the Civil Code requires that a donation of immovable property be made in a public document, specifying the property donated and the value of the charges the donee must satisfy. The acceptance must be made in the same deed or in a separate public document, and must be done during the lifetime of the donor. When the law requires a contract to be in a certain form for validity, that requirement is absolute and indispensable. The Deed of Donation was not duly notarized: the stamped name of the notary public indicated authority "until December 31, 1983," with the year "1987" and "Series of 1987" merely superimposed. Petitioner's own nephew testified that he saw petitioner's husband write "7" over "1983" to make it appear the deed was notarized in 1987. A certification from the Notarial Records Division disclosed that the deed was not reported or filed. Under Rule 132, Section 31, a party producing a document as genuine which has been altered in a part material to the dispute must account for the alteration; failing to do so, the document is inadmissible. Additionally, the lands described in the deed were covered by TCT Nos. 73645 and 73646, which had already been cancelled by an order dated April 8, 1981. The Court also found it puzzling that six months after the supposed donation, the Unchuan Development Corporation, represented by petitioner's husband, filed suit to compel the Lozada sisters to surrender their titles by virtue of a sale — inconsistent with a claim of donation.

• Hearsay Evidence: Evidence is hearsay when its probative force depends on the competency and credibility of persons other than the witness by whom it is sought to be produced. An affidavit is hearsay where its maker did not take the witness stand. Anita's sworn statement was of this kind, as she did not appear in court. However, the rules of exclusion do not cover admissions of a party. Section 26 of Rule 130 provides that the act, declaration, or omission of a party as to a relevant fact may be given in evidence against him, and such admissions are admissible even if hearsay. The Court distinguished admissions against interest (made by a party or one in privity, admissible regardless of declarant's availability) from declarations against interest (made by a non-party, admissible only when the declarant is unavailable). Anita's videotaped statement qualified as a party admission. Nevertheless, object evidence such as a videotape must be authenticated by special testimony showing it was a faithful reproduction. Lacking this authentication, the videotaped statement was excluded. This exclusion did not detract from the conclusion that petitioner failed to prove any right to the lands by preponderant evidence.

• Presumption of Regularity of Notarized Documents — A notarized and authenticated deed of sale enjoys the presumption of regularity and is admissible without further proof of due execution. The Court relied on this presumption to uphold the validity of the Deed of Sale and to declare Antonio a buyer in good faith and for value.

• Formal Requisites of Donation of Immovable Property (Article 749, Civil Code) — A donation of immovable property must be made in a public document, specifying the property donated and the value of the charges the donee must satisfy. Acceptance must be made in the same deed or in a separate public document during the lifetime of the donor. When the law requires a contract to be in a certain form for validity, that requirement is absolute and indispensable. The Court applied this doctrine to nullify the Deed of Donation, which was neither duly notarized nor filed with the Notarial Records Division.

• Authentication of Documentary Evidence — A document to be admissible in evidence must be previously authenticated; its due execution or genuineness must first be shown. The Court excluded Peregrina's medical records for lack of authentication, as the hospital's certification denied having certified or mailed copies to the Philippines.

• Rule on Altered Documents (Rule 132, Section 31) — A party producing a document as genuine which has been altered after its execution in a part material to the dispute must account for the alteration. If he fails to do so, the document is inadmissible. The Court applied this rule to exclude the Deed of Donation, which bore superimposed alterations to the notarial year.

• Admissions Against Interest vs. Declarations Against Interest — Admissions against interest are made by a party to the litigation or one in privity with such party, and are admissible whether or not the declarant is available as a witness. Declarations against interest are made by a person who is neither a party nor in privity with a party, are secondary evidence, and are admissible only when the declarant is unavailable. The Court applied this distinction to classify Anita's videotaped statement as a party admission admissible notwithstanding its hearsay character, though it was ultimately excluded for lack of authentication as object evidence.

• Authentication of Object Evidence — Object evidence, such as a videotape, must be authenticated by special testimony showing that it was a faithful reproduction. Lacking such authentication, the videotaped statement of Anita was excluded.

• Moral and Exemplary Damages — Moral damages cannot be awarded in the absence of a wrongful act or omission, fraud, or bad faith. When an action is filed in good faith, there should be no penalty on the right to litigate; error alone is not a ground for moral damages. Exemplary damages may be awarded only after the claimant has shown entitlement to moral damages. The Court deleted both awards for lack of factual and legal basis.

• "When the law requires that a contract be in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable." — This passage states the ratio decidendi for nullifying the Deed of Donation, anchoring the Court's holding on the mandatory formal requirements of Article 749 of the Civil Code.

• "Having said that, we deem it unnecessary to rule on the issue of laches as the execution of the deed created no right from which to reckon delay in making any claim of rights under the instrument." — This passage explains why the issue of laches was rendered moot by the nullity of the donation, a point frequently relevant in cases where equitable defenses are raised against void instruments.

• "There is a vital distinction between admissions against interest and declaration against interest. Admissions against interest are those made by a party to a litigation or by one in privity with or identified in legal interest with such party, and are admissible whether or not the declarant is available as a witness." — This passage articulates the canonical distinction between admissions and declarations against interest, a doctrine commonly tested in evidence law.

• "Moral damages cannot be awarded in the absence of a wrongful act or omission or fraud or bad faith. When the action is filed in good faith there should be no penalty on the right to litigate." — This passage defines the governing standard for moral damages in property disputes, explaining the deletion of the damages awarded by the lower courts.

• Yao vs. Court of Appeals, G.R. No. 132428, October 24, 2000 — Cited for the proposition that faithful adherence to Section 14, Article VIII of the 1987 Constitution is a paramount component of due process and fair play, requiring courts to explain the factual and legal reasons for their conclusions.

• Estrada vs. Desierto, G.R. Nos. 146710-15 & 14638, April 3, 2001 — Cited for the definition of hearsay evidence and the three reasons for its exclusion: absence of cross-examination, absence of demeanor evidence, and absence of oath; also for the principle that the rules of exclusion do not cover admissions of a party.

• People vs. Quidato, Jr., G.R. No. 117401, October 1, 1998 — Cited for the hornbook doctrine that an affidavit is merely hearsay evidence where its maker did not take the witness stand.

• United States vs. Ching Po, 23 Phil. 578 (1912) — Cited for the principle that a person's acts, conduct, and declarations, wherever made, if voluntary, are admissible against him, as it is fair to presume they correspond with the truth.

• Filinvest Credit Corporation vs. Mendez, No. L-66419, July 31, 1987 — Cited for the rule that moral damages cannot be awarded in the absence of a wrongful act or omission or fraud or bad faith, and that error alone is not a ground for moral damages.

• Twin Towers Condominium Corporation vs. Court of Appeals, G.R. No. 123552, February 27, 2003 — Cited for the principle that calibration of facts is not the function of the Supreme Court in a petition for review on certiorari.

• Article 749, Civil Code — Requires that a donation of immovable property be made in a public document specifying the property donated and the value of charges the donee must satisfy, with acceptance made in the same deed or a separate public document during the donor's lifetime. Applied to nullify the Deed of Donation for non-compliance with formal requisites.

• Article 1356, Civil Code — Provides that when the law requires a contract to be in some form for validity or enforceability, that requirement is absolute and indispensable. Cited in support of the strict application of Article 749.

• Section 3, Republic Act No. 7042 (Foreign Investments Act of 1991) — Defines "Philippine national" as a corporation organized under Philippine laws with at least 60% of its capital stock outstanding and entitled to vote owned and held by Filipino citizens. Applied to determine that Damasa Corporation qualified as a Philippine national capable of acquiring disposable lands.

• Section 14, Article VIII, 1987 Constitution — Requires that no decision be rendered by any court without expressing clearly and distinctly the facts and the law on which it is based. Applied to assess whether the Court of Appeals violated petitioner's right to due process.

• Section 26, Rule 130, Rules of Court — Provides that the act, declaration, or omission of a party as to a relevant fact may be given in evidence against him. Applied to classify Anita's videotaped statement as a party admission admissible notwithstanding its hearsay character.

• Section 31, Rule 132, Rules of Court — Requires a party producing an altered document as genuine to account for the alteration; failure to do so renders the document inadmissible. Applied to exclude the Deed of Donation bearing material alterations.

• Section 3, Rule 131, Rules of Court — Presumptions including that official duty has been regularly performed (par. m) and that all matters within an issue in a case were laid before the court and passed upon by it (par. o). Applied to sustain the Court of Appeals' decision against petitioner's due process challenge.

• Sections 3 and 4, Rule 45, Rules of Court — Require proof of service of the petition on the lower court and adverse party, and specify the contents of the petition. Raised by respondents as a procedural ground for dismissal, though the Court proceeded to decide the case on the merits.

Conchita Carpio Morales, Dante O. Tinga, Presbitero J. Velasco, Jr., and Arturo D. Brion concurred. No separate concurring opinions were written.