Gonzales v. Court of Appeals
REITERATIONFacts
The Antecedents: The deceased spouses Ignacio Gonzales and Marina Gonzales were registered owners of two agricultural land parcels (Lot 551-C and Lot 552-A) in Cabanatuan City. Petitioners are their successors-in-interest. Private respondents are farmers and tenants who cultivated the land even before World War II. On July 12, 1972, Ignacio Gonzales executed a Deed of Donation conveying his share of Lot No. 551-C (46.97 hectares) to his 14 grandchildren. This donation was not registered. On October 21, 1972, Presidential Decree No. 27 (P.D. No. 27) took effect, placing the landholdings under Operation Land Transfer. Private respondents were issued Certificates of Land Transfer and Emancipation Patents. On March 5, 1974, the administratrix of Marina Gonzales' estate filed an application for retention, requesting exclusion of the property from Operation Land Transfer. This was initially denied but later, a reinvestigation resulted in a resolution recommending exemption for Lot No. 551-C. On September 3, 1991, the DAR Secretary issued an order declaring Lot No. 551-C exempt from Operation Land Transfer and cancelling the Certificates of Land Transfer issued to private respondents. Procedural History: Private respondents filed a petition for certiorari with the Court of Appeals, which reversed the DAR Secretary's ruling and upheld the Certificates of Land Transfer and Emancipation Patents. Petitioners moved for reconsideration, which was denied by the Court of Appeals. The Petition: Petitioners seek to annul the Court of Appeals' decision and resolution, arguing that the land subject to the donation does not fall within P.D. 27, that the tenants were aware of the donation prior to P.D. 27's effectivity, and that non-registration rules are inapplicable.
Issue(s)
Whether the unregistered deed of donation can exclude the subject land from the coverage of Operation Land Transfer under P.D. No. 27. Whether the tenant-farmers had actual knowledge of the deed of donation prior to the effectivity of P.D. No. 27.
Ruling
The petition is denied, and the decision of the Court of Appeals is affirmed. The unregistered deed of donation cannot operate to exclude the subject land from the coverage of Operation Land Transfer of P.D. No. 27. The Certificates of Land Transfer and Emancipation Patents issued to private respondents cannot be cancelled.
Ratio Decidendi
On the issue of whether the unregistered deed of donation can exclude the subject land from the coverage of Operation Land Transfer under P.D. No. 27: The Court held that for a donation of an immovable property to be valid between the parties, it must be in a public document as provided by Article 749 of the Civil Code. However, to bind third persons, the donation must be registered in the Registry of Property, as stated in Article 709 of the Civil Code. Registration is not necessary for the validity of the donation between the donor and donee, but it is crucial for affecting the rights of third parties. The act of registration is the operative act that conveys or affects registered land concerning third persons, as stipulated in Section 50 of Act No. 496, as amended by Section 51 of P.D. No. 1529. The Court emphasized that registration creates constructive notice to the whole world, as per Section 52 of P.D. No. 1529. In this case, the deed of donation was undisputed to be unregistered. Therefore, it could not bind the private respondents, who were tenant-farmers and considered third persons in this context, as they did not participate in the deed or have actual knowledge of it. The Court reiterated the doctrine that non-registration of a deed of donation does not bind other parties ignorant of a previous transaction, citing Sales vs. Court of Appeals. Consequently, the unregistered deed of donation could not exclude the land from Operation Land Transfer, which took effect on October 21, 1972, thereby protecting the rights tenant-farmers acquired under P.D. No. 27. On the issue of whether the tenant-farmers had actual knowledge of the deed of donation prior to the effectivity of P.D. No. 27: The Court found the petitioners' contention that the private respondents were aware of the donation to be unacceptable. The testimony of Francisco Villanueva, who claimed to have informed his co-tenants, was deemed unreliable because he had transferred his right to cultivate the land in 1965, prior to the donation in 1972, suggesting he was no longer a tenant or overseer at the time. Furthermore, Abad Dela Cruz, another alleged witness, executed an affidavit denying having testified before Atty. Romeo Bello that he and his co-tenants were aware of the donation, and he declared he had no knowledge of the donation or any investigation conducted by the DAR regarding it. The claim that private respondents shared produce with the donees was also found to be unfounded, as the evidence showed they paid rentals to Ignacio Gonzales, not his grandchildren. The Court also rejected the argument that the failure to register was due to pending intestate proceedings or a mortgage to PNB, as these circumstances did not preclude registration. Therefore, the Court affirmed the appellate court's conclusion that the tenant-farmers lacked actual knowledge of the donation.
Main Doctrine
An unregistered deed of donation of an immovable property, while valid between the donor and donee, does not bind third persons who are not parties to the donation and have no actual knowledge thereof. Consequently, such unregistered donation cannot operate to exclude the subject land from the coverage of Operation Land Transfer under Presidential Decree No. 27, as the rights of tenant-farmers under said decree are deemed to have been acquired upon its effectivity and they are considered third persons in relation to the unregistered deed.