Tax Donors Tax

8/10/2019 Tax Donors Tax

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Del Rosario vs Ferrer

This case pertains to a gift, otherwise denominated as anation mortis causa, which in reality is a donation inter vivosmade

ective upon its execution by the donors and acceptance thereof by thenees, and immediately transmitting ownership of the donated propertythe latter, thus precluding a subsequent assignment thereof by one of

e donors.

e Facts and the ase!n "ugust #$, %&'( the spouses )eopoldo and *uadalupe

on+ales executed a document entitled Donation Mortis Causa-%/in favortheir two children, "suncion and 0miliano, and their granddaughter,

rabini 2daughter of their predeceased son, 3oilo4 covering the spouses5

'6square meter lot and the house on it in 7andacan, 8anila

#/

in equalares. The deed of donation reads9

:t is our will that this Donation MortisCausashall be irrevocable and shall be respected bythe surviving spouse.

:t is our will that 1arabini *on+ales6del Rosarioand 0miliano *on+ales will continue to occupy theportions now occupied by them.

:t is further our will that thisD!;"T:!; MORTIS CAUSAshall not in any way aectany other distribution of other properties belonging toany of us donors whether testate or intestate andwhere ever situated.

:t is our further will that any one survivingspouse reserves the right, ownership, possession andadministration of this property herein donated andaccepted and this Disposition and Donation shall be

operative and eective upon the death of the D!;!Rnding that the donation was in fact one made inter vivos, the donors5ention being to transfer title over the property to the donees during thenors5 lifetime, given its irrevocability. onsequently, said the RT,opoldo5s subsequent assignment of his rights and interest in theoperty was void since he had nothing to assign. The RT thus directede registration of the property in the name of the donees in equal shares.

!n "suncion5s appeal to the ourt of "ppeals 2"4, the latterndered a decision on December #=, #@@(,$/reversing that of theT. The " held that 1arabini cannot, through her petition for the probate

the deed of donation mortis causa, collaterally attacC )eopoldo5s deedassignment in "suncion5s favor. The " further held that, since no

oceeding exists for the allowance of what 1arabini claimed was actually anation inter vivos, the RT erred in deciding the case the way it

d. Finally, the " held that the donation, being one given mortis causa,d not comply with the requirements of a notarial will, (/ rendering theme void. Following the "5s denial of 1arabini5s motion forconsideration,&/she >led the present petition with this ourt.

ue 7resentedThe Cey issue in this case is whether or not the spouses )eopoldo

d *uadalupe5s donation to "suncion, 0miliano, and 1arabini was anation mortis causa, as it was denominated, or in fact a donation inter

vos.

e ourt5s RulingThat the document in question in this case was captioned

onation Mortis Causa- is not controlling. This ourt has held that, if anation by its terms is inter vivos, this character is not altered by the factat the donor styles it mortis causa.%@/

:nAustria-Magat v. Court of Appeals,%%/the ourt held thatrevocability- is a quality absolutely incompatible with the idea ofnveyances mortis causa, where revocability- is precisely the essence ofe act. " donation mortis causahas the following characteristics9

%. :t conveys no title or ownership to the

transferee before the death of the transferor or, whatamounts to the same thing, that the transferor should

retain the ownership 2full or naCed4 and control of theproperty while alive

#. That before his death, the transfershould be revocable by the transferor at will, ad nutumbut revocability may be provided for indirectly bymeans of a reserved power in the donor to dispose ofthe properties conveyed and

=. That the transfer should be void if thetransferor should survive the transferee.%#/ 2Enderscoring supplied4

The ourt thus said inAustria-Magatthat the exirrevocability- of the donation is the distinctive standard that identhe document as a donation inter vivos.- ere, the donors plainly saidit is our will that this Donation Mortis Causashall be irrevocable andbe respected by the surviving spouse.- The intent to maCe the don

irrevocable becomes even clearer by the proviso that a surviving dshall respect the irrevocability of the donation. onsequentlydonation was in reality a donation inter vivos.

The donors in this case of course reserved the right, ownepossession, and administration of the property- and made the donoperative upon their death. Gut this ourt has consistently held thatreservation 2reddendum4 in the context of an irrevocable donation smeans that the donors parted with their naCed title, maintaonly bene>cial ownership of the donated property while they lived.%=/

;otably, the three donees signed their acceptance odonation, which acceptance the deed required.%B/ This ourt has heldan acceptance clause indicates that the donation is inter vivos, acceptance is a requirement only for such Cinddonations. Donations mortis causa, being in the form of a will, neebe accepted by the donee during the donor5s lifetime.%A/

Finally, as 1ustice 1. G. ). Reyes said in Puig v. Peaoridacase of doubt, the conveyance should be deemed a donationvivosrather than mortis causa, in order to avoid uncertainty as to

ownership of the property sub?ect of the deed.nal. The reason is that such Cind of donis deemed perfected from the moment the donor learned of the doacceptance of the donation. The acceptance maCes the doneeabsolute owner of the property donated.%$/

*iven that the donation in this case was irrevocable orgiven inter vivos, )eopoldo5s subsequent assignment of his rightsinterests in the property to "suncionshould be regarded as void fothen, he had no more rights to assign. e could not give what hlonger had. !emo dat "uod non #a$et.%(/

The trial court cannot be faulted for passing upon, in a pefor probate of what was initially supposed to be a donation mortis cthe validity of the document as a donation inter vivosand the nullone of the donor5s subsequent assignment of his rights and interests iproperty. The ourt has held before that the rule on probate iinHexible and absolute.%&/ 8oreover, in opposing the petition for pr

and in putting the validity of the deed of assignment squareissue, "suncion or those who substituted her may not now claim thatrial court improperly allowed a collateral attacC on such assignment.

I0R0F!R0, the ourt *R";T< the petition,


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hether or not the spouses )eopdo and *uadalupe5s donation to "suncion, 0miliano,d 1arabini was a donationortis causa%it was denominated, or in fact adonation

ter vivos

u l i n g 9was a donationter vivosThe fact that the document in question was denominated asa donationortis causa is not controlling if a donation by its terms ister vivosnustria-Magat v. Court of Appeals

he ourt held that KirrevocabilityK is a qualityabsolutely incompatibleth the idea of conveyancesortis causawhere KrevocabilityKis precisely the essence of the act. :n the presentse, the donors plainly said that it isKour will that this Donation 8ortisusa shall be irrevocable and shall be respected bythe surviving spouse.Ke intent to maCe the donation irrevocable becomes even

earer by the proviso that a surviving donor shall respect the irrevocabilitof the donation.Thus, given that the donation was indeedter vivoseopoldo5s subsequent assignmenthis rights and interests in the property to "suncion is void.6666666666666666666l Rosario v. Ferrer#@


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me be declared null and void insofar as their two6thirds shares arencerned.

"fter trial, the 8T rendered its Decision dated ' "pril %&&( in ivilse ;o. %A', declaring petitioner and her husband as the true and lawful

wners of the sub?ect property. The decretal portion of the 8T Decisionads9

I0R0F!R0, ?udgment is hereby rendered9". Declaring the herein petitioner and her

sband/ the true, lawful and exclusive owners and entitledthe possession of the sub?ect property/ described and

ferred to under paragraph # of the /omplaint and covered Tax Declaration ;o. %'''' in the names of the

etitioner and her husband/

G. !rdering the herein respondents/ andanyone hired by, acting or worCing for them, to ceaseand desist from asserting or claiming any right orinterest in, or exercising any act of ownership orpossession over the sub?ect property/

. !rdering the respondents/ to pay thepetitioner and her husband/ the amount of 7%@,@@@.@@as attorney5s fee. Iith cost against the respondents/.%=/

The respondents appealed the aforesaid 8T Decision to theT. Their appeal was docCeted as ivil ase ;o. AA%%.

Respondents argued in their appeal that the 8T erred in notsmissing the omplaint >led by the petitioner and her husband for failureidentify the sub?ect property therein. Respondents further faulted the

T for not declaring 0speran+a5s "Ldavit dated & 1une %&(' 66inquishing all her rights and interest over the sub?ect property in favorpetitioner and her husband 66 as null and void insofar as respondents5

o6thirds share in the sub?ect property is concerned.

!n %# ndings of fact of the trial

are entitled to great weight on appeal and should not be disturbed exfor strong and valid reasons, because the trial court is in a better poto examine the demeanor of the witnesses while testifying. :t is function of this ourt to analy+e and weigh evidence by the parties alagain. This ourt5s ?urisdiction is, in principle, limited to reviewing eof law that might have been committed by the ourt of "ppeals. #=

rule, however, is sub?ect to several exceptions, #B/one of which is prin this case, i.e., when the factual >ndings of the ourt of "ppeals antrial court are contradictory.

:n this case, the >ndings of fact of the 8T as regards the origthe sub?ect property are in conHict with the >ndings of fact of both theand the ourt of "ppeals. ence, this ourt will have to examinrecords to determine >rst the true origin of the sub?ect property asettle whether the respondents have the right over the same for beinheirs and co6owners, together with their grand aunt, 0speran+a, bthis ourt can resolve the issues raised by the petitioner in her 7etitio

"fter a careful scrutiny of the records, this ourt aLrm>ndings of both the RT and the ourt of "ppeals as regards the orig

the sub?ect property and the fact that respondents, with their grand0speran+a, were co6heirs and co6owners of the sub?ect property.

The records disclosed that the sub?ect property was partparcel of land#A/situated in 8aloco, :ba?ay, "Clan, consisting of square meters and commonly owned in equal shares by the sib7antaleon 8aglunob 27antaleon4 and 7lacida 8aglunob6


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o. A&(( 2%&B#4,#$/;o. '#@@ 2%&BA4#(/and ;o. $#== 2%&A=4#&/were allued in the name of Jictorino.

ed thereof in anauthentic form, and this step shall be noted in bothinstruments.From the aforesaid provision, there are three requisites fo

validity of a simple donation of a real property, to wit9 2%4 it must be min a public instrument 2#4 it must be accepted, which acceptance mamade either in the same Deed of Donation or in a separate pinstrument and 2=4 if the acceptance is made in a separate instrumthe donor must be noti>ed in an authentic form, and the same munoted in both instruments. This ourt agrees with the RT and the ourt of "ppeals tha"Ldavit executed by 0speran+a relinquishing her rights, share, intand participation over the sub?ect property in favor of the petitioneher husband suered from legal in>rmities, as it failed to comply witaforesaid requisites of the law.

:n Sumipat v. &anga,=$/this ourt declared that titlimmovable property does not pass from the donor to the donee by vof a Deed of Donation until and unless it has been accepted in a pinstrument and the donor duly noti>ed thereof. The acceptance mamade in the very same instrument of donation. :f the acceptance doeappear in the same document, it must be made in another. IherDeed of Donation fails to show the acceptance, or where the formal n

of the acceptance, made in a separate instrument, is either not givthe donor or else not noted in the Deed of Donation and in the sepaacceptance, the donation is null and void.=(/

:n the present case, the said "Ldavit, which is tantamountDeed of Donation, met the >rst requisite, as it was notari+ed thbecame a public instrument. ;evertheless, it failed to meet the aforsecond and third requisites. The acceptance of the said donation wamade by the petitioner and her husband either in the same "Ldavit oseparate public instrument. "s there was no acceptance made of thedonation, there was also no notice of the said acceptance given tdonor, 0speran+a. Therefore, the "Ldavit executed by 0speran+a in of petitioner and her husband is null and void.

The subsequent notari+ed Deed of "cceptance=&/datled in court, or wheRT had already rendered its Decision dated %# lled by the petitioner. ;either the "Ldavit nor the De"cceptance bears the fact that 0speran+a received notice ofacceptance of the donation by petitioner. For this reason, 0speran+a5s one6third share in the sub?ect property cannot be ad?udicto the petitioner.

Iith the foregoing, this ourt holds that the RT and the o

"ppeals did not err in declaring null and void 0speran+a5s "Ldavit.

The next issue to be resolved then is whether the RT, as wthe ourt of "ppeals, erred in declaring !T ;o. )!"6%$B( in the nampetitioner and her husband null and void.

"gain, this ourt answers the said issue in the negative.


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The attacC is considered direct when the ob?ect of an action is tonul or set aside such proceeding, or en?oin its enforcement. onversely,attacC is indirect or collateral when, in an action to obtain a dierentief, an attacC on the proceeding is nevertheless made as an incidentereof. cate of title may be an originaltion or a counterclaim, in which a certi>cate of title is assailed as void.

" counterclaim is considered a new suit in which the defendant ise plainti and the plainti in the complaint becomes the defendant. :tands on the same footing as, and is to be tested by the same rules as ifwere, an independent action. BB/

:n their "nswer to the omplaint for Nuieting of Title >led by thetitioner and her husband before the 8T, respondents included therein

ounterclaim wherein they repleaded all the material allegations in theirLrmative defenses, the most essential of which was their claim thattitioner and her husband 66 by means of fraud, undue inHuence andceit 66 were able to maCe their grand aunt, 0speran+a, who was alreadyd and illiterate, aLx her thumbmarC to the "Ldavit, wherein shenounced, waived, and quitclaimed all her rights and interest over theb?ect property in favor of petitioner and her husband. :n addition,spondents maintained in their "nswer that as petitioner and hersband were not tenants either of 0speran+a or of the respondents, the

"R could not have validly issued in favor of petitioner and her husbandT ;o. )!"6%$B(. Thus, the respondents prayed, in their counterclaimivil ase ;o. %A' before the 8T, that !T ;o. )!"6%$B( issued ine name of petitioner, married to Ray 8ars 0. "rangote, be declared nulld void, insofar as their two6thirds shares in the sub?ect property arencerned.

:t is clear, thus, that respondents5 "nswer with ounterclaim was

direct attacC on petitioner5s certi>cate of title. Furthermore, since all the

sential facts of the case for the determination of the validity of the titlee now before this ourt, to require respondents to institute a separatencellation proceeding would be pointlessly circuitous and against thest interest of ?ustice.

0speran+a5s "Ldavit, which was the sole basis of petitioner5s

aim to the sub?ect property, has been declared null and void. 8oreover,titioner and her husband were not tenants of the sub?ect property. :nct, petitioner herself admitted in her omplaint >led before the 8Tat her husband is out of the country, rendering it impossible for him toorC on the sub?ect property as a tenant. :nstead of cultivating theb?ect property, petitioner and her husband possessed the same bynstructing a house thereon. Thus, it is highly suspicious how thetitioner was able to secure from the D"R a erti>cate of )and !wnership

ward 2)!"4 over the sub?ect property. The D"R awards such certi>catesthe grantees only if they ful>ll the requirements of Republic "ct ;o.A$, otherwise Cnown as the omprehensive "grarian Reform 7rogram

"R74.BA/

ence, the RT and the ourt of "ppeals did not err in declaringll and void !T ;o. )!"6%$B( in the name of the petitioner, marriedRay 8ars 0. "rangote.

onsidering that 0speran+a died without any compulsory heirsd that the supposed donation of her one6third share in the sub?ectoperty per her "Ldavit dated & 1une %&(A was already declared null andid, 0speran+a5s one6third share in the sub?ect property passed on to her

gal heirs, the respondents.

"s petitioner5s last6ditch eort, she claims that she is a possessor inod faith and, thus, entitled to the rights provided for under "rticles BB(d AB' of the ivil ode.

This claim is untenable.

The ivil ode describes a possessor in good faith as follows9

"rt. A#'. e is deemed a possessor in goodfaith who is not aware that there exists in his title ormode of acquisition any Haw which invalidates it.

e is deemed a possessor in bad faith whopossesses in any case contrary to the foregoing.

8istaCe upon a doubtful or diLcult question oflaw may be the basis of good faith.

"rt. %%#$. The good faith of the possessorconsists in the reasonable belief that the person fromwhom he received the thing was the owner thereof, andcould transmit his ownership.

7ossession in good faith ceases from the moment defects in the title

e made Cnown to the possessor by extraneous evidence or by a suit forcovery of the property by the true owner. 0very possessor in good faith

becomes a possessor in bad faith from the moment he becomes athat what he believed to be true is not so.B'/

:n the present case, when respondents came to Cnow that an

over the sub?ect property was issued and registered in petitioner5s non #' 8arch %&&=, respondents brought a omplaint on $ "ugust before the *uponof &aranga+ 8aloco, :ba?ay, "Clan, challenging theof petitioner to the sub?ect property on the basis that said proconstitutes the inheritance of respondent, together with their grand0speran+a, so 0speran+a had no authority to relinquish the entire suproperty to petitioner. From that moment, the good faith of the petithad ceased.

7etitioner cannot be entitled to the rights under "rticles BB(AB' of the ivil ode, because the rights mentioned therein are applic

only to builders in good faith and not to possessors in good faith.

8oreover, the petitioner cannot be considered a builder in faith of the house on the sub?ect property. :n the context that such teused in particular reference to "rticle BB( of the ivil ode, a buildgood faith is one who, not being the owner of the land, builds on that believing himself to be its owner and unaware of any defect in his titmode of acquisition.B$/

The various provisions of the ivil ode, pertinent to the suread9

"rticle BB(. The owner of the land on which

anything has been built, sown, or planted in good faith,shall have the right to appropriate as his own theworCs, sowing or planting, after payment of theindemnity provided for in "rticles AB' and AB(, or tooblige the one who built or planted to pay the price of

the land, and the one who sowed, the properrent. owever, the builder or planter cannot be obligedto buy the land if its value is considerably more thanthat of the building or trees. :n such a case, he shallpay reasonable rent, if the owner of the land does notchoose to appropriate the building or trees after properindemnity. The parties shall agree upon the terms ofthe lease and in case of disagreement, the court shall>x the terms thereof.

"rticle BB&. e who builds, plants, or sows inbad faith on the land of another, loses what is built,planted or sown without right to indemnity.

"rticle BA@. The owner of the land on whichanything has been built, planted or sown in bad faithmay demand the demolition of the worC, or that theplanting or sowing be removed, in order to replacethings in their former condition at the expense of the

person who built, planted or sowed or he may compelthe builder or planter to pay the price of the land, andthe sower the proper rent.Ender the foregoing provisions, the builder in good faith

compel the landowner to maCe a choice between appropriatingbuilding by paying the proper indemnity or obliging the builder to paprice of the land. The choice belongs to the owner of the land, a ruleaccords with the principle of accession, i.e., that the accessory followprincipal and not the other way around. 0ven as the option lies witlandowner, the grant to him, nevertheless, is preclusive. e must chone. e cannot, for instance, compel the owner of the building to inremove it from the land. :n order, however, that the builder can inthat accruing bene>t and en?oy his corresponding right to demand tchoice be made by the landowner, he should be able to prove good on his part.B(/

*ood faith, here understood, is an intangible and abstract q

with no technical meaning or statutory de>nition, and it encompa

among other things, an honest belief, the absence of malice anabsence of design to defraud or to seeC an unconscionable advantagindividual5s personal good faith is a concept of his own mind therefore, may not conclusively be determined by his protestaalone. :t implies honesty of intention, and freedom from Cnowledcircumstances which ought to put the holder upon inquiry. The essengood faith lies in an honest belief in the validity of one5s right, ignorana superior claim, and absence of intention to overreach another. "pplpossession, one is considered in good faith if he is not aware that texists in his title or mode of acquisition any Haw which invalidates it. B

:n this case, the sub?ect property waived and quitclaime

0speran+a to the petitioner and her husband in the "Ldavit was covered by a tax declaration in the name of 0speran+a. 7etitioner deven bother to looC into the origin of the sub?ect property and to pinto the right of 0speran+a to relinquish the same. Thus, when petitand her husband built a house thereon in %&(& they cannot be consid

to have acted in good faith as they were fully aware that when 0speexecuted an "Ldavit relinquishing in their favor the sub?ect propert
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ly proof of 0speran+a5s ownership over the same was a mere taxclaration. This fact or circumstance alone was enough to put thetitioner and her husband under inquiry.


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mittedly, the complaint does not allege that the parties exerted earnest

wards a compromise and that the same failed. owever, private

spondent 7edro *. ernando apparently overlooCed this alleged defect

nce he did not >le any motion to dismiss nor attacC the complaint on this

ound in his answer. :t was only on $ December %&, at the pre6trial

nference, that the relationship of petitioner *audencio *uerrero and

spondent ernando was noted by respondent 1udge )uis G. Gello, 1r.,

ey being married to half6sisters hence are brothers6in6law, and on the

sis thereof respondent 1udge gave petitioner >ve 2A4 days Kto >le his

otion and amended complaintK to allege that the parties were very close

atives, their respective wives being sisters, and that the complaint to be

aintained should allege that earnest eorts towards a compromise were

erted but failed. "pparently, respondent 1udge considered this

>ciency a ?urisdictional defect.

n %% December %&, *uerrero moved to reconsider the $ December

!rder claiming that since brothers by aLnity are not members of the

me family, he was not required to exert eorts towards a compromise.

uerrero liCewise argued that ernando was precluded from raising this

sue since he did not >le a motion to dismiss nor assert the same as an

Lrmative defense in his answer.

n ## December %&, respondent 1udge denied the motion for

consideration holding that Kf/ailure to allege that earnest eorts

wards a compromise is ?urisdictional such that for failure to allege same

e court would be deprived of its ?urisdiction to taCe cogni+ance of the

se.K e warned that unless the complaint was amended within >ve 2A4

ys the case would be dismissed.

n #& 1anuary %&&=, the A6day period having expired without *uerrero

mending his complaint, respondent 1udge dismissed the case, declaring

e dismissal however to be without pre?udice.

uerrero appeals by way of this petition for review the dismissal by the

urt a "uo. e raises these legal issues9 2a4 whether brothers by aLnity

e considered members of the same family contemplated in "rt. #%$, par.

4, and "rt. ### of the ;ew ivil ode, as well as under rst exerted before a complaint is given due course P

This rule is introduced because it is diLcult to im

a sadder and more tragic spectacle than a litig

between members of the same family. :t is nece

that every eort should be made toward a compro

before a litigation is allowed to breed hate and pa

in the family. :t is Cnown that a lawsuit between

relatives generates deeper bitterness than bet

strangers . . . " litigation in a family is to be lame

far more than a lawsuit between strangers . . . A

Gut the instant case presents no occasion for the application of

above6quoted provisions. "s early as two decades ago, we already

in 0a+on v.0a+on'that the enumeration of Kbrothers and sister

members of the same family does not comprehend Ksisters6in6lawK. :ncase, then hief 1ustice oncepcion emphasi+ed that Ksisters6in

2hence, also Kbrothers6in6lawK4 are not listed under "rt. #%$ of the

ivil ode as members of the same family. ling the present s

:n his omment, ernando argues that K. . . although both wives o

parties were not impleaded, it remains a truism that being spouses o

contending parties, and the litigation involves ownership of real prop

the spousesQ interest and participation in the land in question cann

denied, maCing the suit still a suit between half6sisters . . .K$

Finding this argument preposterous, *uerrero counters in his Reply th

Kwife has no actual interest and participation in the land sub?ect of th

suit, which the petitioner bought, according to his complaint, befor

married his wife.K(This factual controversy however may be best le

the court a "uo to resolve when it resumes hearing the case.

"s regards the second issue, we need only reiterate our rulin

O1*aco v.Co C#o C#it,&citing Mendo2a v.Court of Appeals, %@tha

attempt to compromise as well as the inability to succeed is a cond

precedent to the >ling of a suit between members of the same family

absence of such allegation in the complaint being assailable at any s

of the proceeding, even on appeal, for lacC of cause of action.

:t is not therefore correct, as petitioner contends, that private responmay be deemed to have waived the aforesaid defect in failing to mo

dismiss or raise the same in the "nswer. !n the other hand, we ca

sustain the proposition of private respondent that the case was, afte

also dismissed pursuant to


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! !RD0R0D.

6666666666666.*.R. ;o. %@&@'( 1anuary %@, %&&B*"ED0;:! *E0RR0R!,titioner,vs.*:!;") TR:") !ERT !F :)!!< ;!RT0, GR. OJ:, 1ED*0 )E:< G.G0))!,, 7R0led by *E0RR0R!9 brothers by aLnity are notmembers of theme family, he was not required to exerteorts towards a compromise

0;:0D9 Kf/ailure to allege thatearnest eorts towards a compromise isrisdictional such thatfor failure to allege same the court would beprived of its ?urisdiction to taCe cogni+ance of the case.K

se was dismissed without pre?udice9 ;o amendedcomplaint >led


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regards the property, the avite RT held that it is deemed con?ugal

operty.

n ## "ugust %&&B, "lfredo executed a Deed of Donation over the

operty in favor of their daughter, Iinifred *o+on 2Iinifred4. The Register

Deeds of 8alabon, *il Tabi?e, cancelled TT ;o. A=A$ and issued TT ;o.

%@A@((in the name of Iinifred, without annotating the "greement and

e notice of lis pendens on TT ;o. 86%@A@(.

n #' !ctober %&&B, "lfredo, by virtue of a ed and voided.

@B. The Deed of "bsolute cate of Title ;o.

Kin the name of "lfredo *o+on, married to 0lvira RoblesK wit

"greement to Guy and


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! !RD0R0D.%B

n appeal, the ourt of "ppeals aLrmed the 8alabon RT5s decision with

odi>cation. The dispositive portion of the ourt of "ppeals5 Decision

ted $ 1uly #@@A reads9

0R0F!R0, premises considered, the assailed decision dated "pril =,

@% of the RT, Granch $B, 8alabon is hereby "FF:R80D with

!D:F:"T:!;nd the petitions without merit.

This case involves the con?ugal property of "lfredo and 0lvira. ve y

from the date of the contract implementing such decision.

:n the event that one spouse is incapacitated or otherwise unab

participate in the administration of the con?ugal properties, the

spouse may assume sole powers of administration. These powers d

include the powers of disposition or encumbrance which must have

authority of the court or the written consent of the other spouse. :n

absence of such authority or consent, the disposition or encumbrance

be void. owever, the transaction shall be construed as a continuing

on the part of the consenting spouse and the third person, and ma

perfected as a binding contract upon the acceptance by the other sp

or authori+ation by the court before the oer is withdrawn by eith

both oerors. 20mphasis supplied4

:n this case, "lfredo was the sole administrator of the property bec

0lvira, with whom "lfredo was separated in fact, was unable to partic

in the administration of the con?ugal property. owever, as

administrator of the property, "lfredo still cannot sell the property wi

the written consent of 0lvira or the authority of the court. Iithout

consent or authority, the sale is void.%'The absence of the consent o

of the spouse renders the entire sale void, including the portion o

con?ugal property pertaining to the spouse who contracted the sale. %$

if the other spouse actively participated in negotiating for the sale o

property, that other spouse5s written consent to the sale is still requir

law for its validity.%(The "greement entered into by "lfredo and 8ario

without the written consent of 0lvira. Thus, the "greement is entirely

"s regards 8ario5s contention that the "greement is a continuing

which may be perfected by 0lvira5s acceptance before the owithdrawn, the fact that the property was subsequently donate

"lfredo to Iinifred and then sold to :DR: clearly indicates that the

was already withdrawn.

owever, we disagree with the >nding of the ourt of "ppeals tha

one6half undivided share of "lfredo in the property was already forfeit

favor of his daughter Iinifred, based on the ruling of the avite RT i

legal separation case. The ourt of "ppeals misconstrued the ruling o

avite RT that "lfredo, being the oending spouse, is deprived o

share in the net pro>ts and the same is awarded to Iinifred.

The avite RT ruling >nds support in the following provisions o

Family ode9

"rt. '=. The decree of legal separation shall have the following eects

2%4 The spouses shall be entitled to live separately from

other, but the marriage bonds shall not be severed

2#4 The absolute community or the con?ugal partnership sha

dissolved and liquidated but the oending spouse shall hav

right to any share of the net pro>ts earned by the abs

community or the con?ugal partnership, which shall be forf

in accordance with the provisions of "rticle B=2#4

2=4 The custody of the minor children shall be awarded t

innocent spouse, sub?ect to the provisions of "rticle #%= o

ode and
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11/19

e oending spouse shall be disquali>ed from inheriting from the

nocent spouse by intestate succession. 8oreover, provisions in favor of

e oending spouse made in the will of the innocent spouse shall be

voCed by operation of law.

t. B=. The termination of the subsequent marriage referred to in the

eceding "rticle shall produce the following eects9

x x

4 The absolute community of property or the con?ugal partnership, as the

se may be, shall be dissolved and liquidated, but if either spouse

ntracted said marriage in bad faith, his or her share of the net pro>ts ofe community property or con?ugal partnership property shall be forfeited

favor of the common children or, if there are none, the children of the

ilty spouse by a previous marriage or, in default of children, the

nocent spouse 20mphasis supplied4

us, among the eects of the decree of legal separation is that the

n?ugal partnership is dissolved and liquidated and the oending spouse

ould have no right to any share of the net pro>ts earned by the con?ugal

rtnership. :t is only "lfredo5s share in the net pro>ts which is forfeited in

vor of Iinifred. "rticle %@#2B4 of the Family ode provides that Kf/or

rposes of computing the net pro>ts sub?ect to forfeiture in accordance

th "rticle B=, ;o. 2#4 and '=, ;o. 2#4, the said pro>ts shall be the

crease in value between the marCet value of the community property at

e time of the celebration of the marriage and the marCet value at the

me of its dissolution.K learly, what is forfeited in favor of Iinifred is notfredo5s share in the con?ugal partnership property but merely in the net

o>ts of the con?ugal partnership property.

th regard to :DR:, we agree with the ourt of "ppeals in holding that

R: is not a buyer in good faith. "s found by the RT 8alabon and the

urt of "ppeals, :DR: had actual Cnowledge of facts and circumstances

hich should impel a reasonably cautious person to maCe further inquiries

out the vendor5s title to the property. The representative of :DR: testi>ed

at he Cnew about the existence of the notice of lis pendens on TT ;o.

A$ and the legal separation case >led before the avite RT. Thus, :DR:

uld not feign ignorance of the avite RT decision declaring the property

con?ugal.

rthermore, if :DR: made further inquiries, it would have Cnown that the

ncellation of the notice of lis pendens was highly irregular. Ender ed petition of the party who caused the registration of the lis

ndens. :n this case, the lis pendens was cancelled by the Register of

eeds upon the request of "lfredo. There was no court order for the

ncellation of the lis pendens. ;either did 0lvira, the party who caused

e registration of the lis pendens, >le a veri>ed petition for its

ncellation.

sides, had :DR: been more prudent before buying the property, it would

ve discovered that "lfredo5s donation of the property to Iinifred was

thout the consent of 0lvira. Ender "rticle %#A #@of the Family ode, a

n?ugal property cannot be donated by one spouse without the consent of

e other spouse. learly, :DR: was not a buyer in good faith.3avvp#i3

evertheless, we >nd it proper to reinstate the order of the 8alabon RT

r the reimbursement of the 7%( million paid by :DR: for the property,

hich was inadvertently omitted in the dispositive portion of the ourt of

peals5 decision.

0R0F!R0, we D0;U the petitions. Ie "FF:R8 the $ 1uly #@@A Decision

the ourt of "ppeals in "6*.R. J ;o. $BBB$ with the

lowing 8!D:F:"T:!;nality of this Decision.

66666666666666666666666666led with the RT of avite ity a pefor legal separation against herhusband "lfredo. !n 1%&, 0lvira >led a notice oflis pendens, which was thenannotated on TT no. A=A$.Ihile the legal separcase was still pending, "lfredo and 8ario


12/19

owever, ourt of "ppeals said agreement between 8ario and "lfredo isid because 2%4 it was entered into without the consent of 0lvira,

fredo5s wife and, 2#4 "lfredo5s V undivided share has been forfeited invour of Iinifred by the grant of legal separation by the avite RT. 2;oteese reasons given by the ".4

ts of theoperty. The ourt said, learly, what is forfeited in favor of Iinifred ist "lfredo5s share in the con?ugal partnership property but merely in thet pro>ts of the con?ugal partnership property.- Thus, as regards thisint, the " erred.

4 Ias the donation to Iinifred validW ;o, the donation was notlid. 0lvira5s consent was absent.

4 Ias the sale to :nter6Dimensional validW :nter6Dimensional says it is ayer in good faith. rm,

ntributed 7((#,''%.=% each to the campaign funds of ned as a voluntary transfer of property by on

another without any consideration or compensation therefor 2#( .1.

ts of the contributions.


13/19

acting the provision being construed. 2A#@', led the instant petition on 1uly #', %&&A.

ised are the following issues9

%. D:D T0 !;!R"G)0 !ERT !F "770")< 0RR I0; :T

F":)0D T! !;

st, Fifth and ciency shall be supplied by the provisions of this ode.

Thus, reference may be made to the de>nition of a donation in the

ode. "rticle $#A of said ode de>nes donation as9

. . . an act of liberality whereby a person disposes gratuitously of a thi

right in favor of another, who accepts it.

Donation has the following elements9 2a4 the reduction of the patrimo

the donor 2b4 the increase in the patrimony of the donee and, 2c

intent to do an act of liberality or animus donandi.$/

The present case falls squarely within the de>nition of a dona

7etitioners, the late 8anuel *. "bello(/, 1ose . oncepcion, Teodo

Regala and "velino J. ru+, each gave7((#,''%.=% to the campaign f

of


14/19

aterial consideration evinces animus donandi. The fact that their

rpose for donating was to aid in the election of the donee does not

gate the presence of donative intent.

ird :ssue

7etitioners maintain that the de>nition of an electoral contribution-

der the !mnibus 0lection ode is essential to appreciate how a political

ntribution diers from a taxable gift.%%/nes electoral contribution as follows9

e term KcontributionK includes a gift, donation, subscription, loan,

vance or deposit of money or anything of value, or a contract, promiseagreement to contribute, whether or not legally enforceable, made for

e purpose of inHuencing the results of the elections but shall not include

rvices rendered without compensation by individuals volunteering a

rtion or all of their time in behalf of a candidate or political party. :t shall

so include the use of facilities voluntarily donated by other persons, the

oney value of which can be assessed based on the rates prevailing in the

ea.

t from the election of the candidate to whom

ey contribute, in no way amounts to a valuable material consideration so

to remove political contributions from the purview of a donation.

nator "ngara was under no obligation to bene>t the petitioners. The

oper performance of his duties as a legislator is his obligation as an

ected public servant of the Filipino people and not a consideration for the

litical contributions he received. :n fact, as a public servant, he may

en be called to enact laws that are contrary to the interests of his

nefactors, for the bene>t of the greater good.

:n >ne, the purpose for which the sums of money were given, which

as to fund the campaign of


15/19


16/19

e also agree with the ourt of Tax "ppeals that at the time of his death,ller had his residence or domicile in


17/19

0)D9 ;oThe ourt agrees with the ourt of Tax "ppealsthat at the time that Theational :nternal Revenue ode waspromulgated in %&=&, the prevailingnstruction given by thecourts to the KresidenceK was synonymous withmicile. andthat the two were used intercnangeabiy. 8oreover, thereeason to believe that the )egislature adopted the "merican2Federal andate4 estate and inheritance tax system 2see e.g.Report to the Taxmmision of the 7hilippines, Jol. ::, pages%##6%#B, cited in : Dalupan,

ational :nternal Revenue ode"nnotated, p. B'&6B$@4. :n the Enitedates, for estate taxpurposes, a resident is considered one who at the

me of hisdeath had his domicile in the Enited led ... wherein intan

personal properties with the value of 7=&',=@(.&@ were claime

exempted from taxes. !n ;ovember #=, %&AA, respondent, pe

investigation, issued another assessment for estate and inheritance t

in the amounts of 7#@#,#'#.B@ and 7#'$,B@#.(B, respectively, or a to

7B'&,''A.#B ... . :n a letter dated 1anuary %%, %&A', respondent denie

request for exemption on the ground that the law of Tangier isreciprocal to ciency estate and inheritance taxes includin

valorempenalties, surcharges, interests and compromise penalties ...

letter dated February (, %&A', and received by respondent on

following day, petitioner requested for the reconsideration of the dec

denying the claim for tax exemption of the intangible personal prope

and the imposition of the #A\ and A\ ad valorem penalties ... . ow

respondent denied request, in his letter dated 8ay A, %&A' ... and rec

by petitioner on 8ay #%, %&A'. Respondent premised the denial on

grounds that there was no reciprocity with Tangier, which was more

a mere principality, not a foreign country. onsequently, respon

demanded the payment of the sums of 7$=,(A%.#% and 7((,@

respectively, or a total of 7%'%,($B.&A as de>ciency estate and inherit

taxes including surcharges, interests and compromise penalties.K B

The matter was then elevated to the ourt of Tax "ppeals. "s there w

dispute between the parties regarding the values of the properties an

mathematical correctness of the de>ciency assessments, the prin

question as noted dealt with the reciprocity aspect as well as the insi

by the ollector of :nternal Revenue that Tangier was not a foreign co

within the meaning of ne

believe, and so hold, that the expression Kforeign countryK, used in th

proviso of ts of the provi

on the question, this ourt, on 8ay =@, %&'#, resolve to inquire furthe

the question of reciprocity and sent bacC the case to the ourt of

"ppeals for the motion of evidence thereon. The dispositive portion of

resolution reads as follows9 KIhile section %## of the 7hilippine Tax

aforequoted speaCs of Qintangible personal propertyQ in both subdiv

2a4 and 2b4 the alleged laws of Tangier refer to Qbienes muebles situ

en TangerQ, Qbienes muebles radicantes en TangerQ, QmovablesQ

Qmovable propertyQ. :n order that this ourt may be able to deter

whether the alleged laws of Tangier grant the reciprocal tax exemp

required by


18/19

se is remanded/ to the ourt of Tax "ppeals for the reception of

idence or proof on whether or not the words ]bienes mueblesQ,

ovablesQ and Qmovable properties as used in the Tangier laws, include or

mbrace Qintangible person propertyQ, as used in the Tax ode.K ':n line

th the above resolution, the ourt of Tax "ppeals admitted evidence

bmitted by the administrator petitioner "ntonio ampos Rueda,

nsisting of exhibits of laws of Tangier to the eect that Kthe transfers by

ason of death of movable properties, corporeal or incorporeal, including

rniture and personal eects as well as of securities, bonds, shares, ...,

ere not sub?ect, on that date and in said +one, to the payment of any

ath tax, whatever might have been the nationality of the deceased or

s heirs and legatees.K :t was further noted in an order of such ourt

ferring the matter bacC to us that such were duly admitted in evidence

ring the hearing of the case on


19/19

at Tangier provides such exemption to personal properties of

pinos found therein so must the 7hilippines honor the exemption as

ovided for by our tax law with respect to the doctrine of reciprocity.

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Tax Donors Tax