G.R. No.

172804 January 24, 2011

GONZALO VILLANUEVA, represented by his heirs, Petitioner,
vs.
SPOUSES FROILAN and LEONILA BRANOCO, Respondents.

The Facts

Petitioner Gonzalo Villanueva (petitioner), here represented by his heirs, 3 sued respondents, spouses Froilan and Leonila Branoco
(respondents), in the Regional Trial Court of Naval, Biliran (trial court) to recover a 3,492 square-meter parcel of land in Amambajag,
Culaba, Leyte (Property) and collect damages. Petitioner claimed ownership over the Property through purchase in July 1971 from
Casimiro Vere (Vere), who, in turn, bought the Property from Alvegia Rodrigo (Rodrigo) in August 1970. Petitioner declared the
Property in his name for tax purposes soon after acquiring it.

In their Answer, respondents similarly claimed ownership over the Property through purchase in July 1983 from Eufracia Rodriguez
(Rodriguez) to whom Rodrigo donated the Property in May 1965. The two-page deed of donation (Deed), signed at the bottom by
the parties and two witnesses, reads in full:

KNOW ALL MEN BY THESE PRESENTS:

That I, ALVEGIA RODRIGO, Filipino, of legal age, widow of the late Juan Arcillas, a resident of Barrio Bool, municipality of Culaba,
subprovince of Biliran, Leyte del Norte, Philippines, hereby depose and say:

That as we live[d] together as husband and wife with Juan Arcillas, we begot children, namely: LUCIO, VICENTA, SEGUNDINA, and
ADELAIDA, all surnamed ARCILLAS, and by reason of poverty which I suffered while our children were still young; and because my
husband Juan Arcillas aware as he was with our destitution separated us [sic] and left for Cebu; and from then on never cared what
happened to his family; and because of that one EUFRACIA RODRIGUEZ, one of my nieces who also suffered with our poverty,
obedient as she was to all the works in our house, and because of the love and affection which I feel [for] her, I have one parcel of
land located at Sitio Amambajag, Culaba, Leyte bearing Tax Decl. No. 1878 declared in the name of Alvegia Rodrigo, I give (devise)
said land in favor of EUFRACIA RODRIGUEZ, her heirs, successors, and assigns together with all the improvements existing thereon,
which parcel of land is more or less described and bounded as follows:

1. Bounded North by Amambajag River; East, Benito Picao; South, Teofilo Uyvico; and West, by Public land; 2. It has an area of 3,492
square meters more or less; 3. It is planted to coconuts now bearing fruits; 4. Having an assessed value of P240.00; 5. It is now in the
possession of EUFRACIA RODRIGUEZ since May 21, 1962 in the concept of an owner, but the Deed of Donation or that ownership be
vested on her upon my demise.

That I FURTHER DECLARE, and I reiterate that the land above described, I already devise in favor of EUFRACIA RODRIGUEZ since May
21, 1962, her heirs, assigns, and that if the herein Donee predeceases me, the same land will not be reverted to the Donor, but will
be inherited by the heirs of EUFRACIA RODRIGUEZ;

That I EUFRACIA RODRIGUEZ, hereby accept the land above described from Inay Alvegia Rodrigo and I am much grateful to her and
praying further for a longer life; however, I will give one half (1/2) of the produce of the land to Apoy Alve during her lifetime. 4

Respondents entered the Property in 1983 and paid taxes afterwards.

The Issue

The threshold question is whether petitioners title over the Property is superior to respondents. The resolution of this issue rests, in
turn, on whether the contract between the parties predecessors-in-interest, Rodrigo and Rodriguez, was a donation or a devise. If
the former, respondents hold superior title, having bought the Property from Rodriguez. If the latter, petitioner prevails, having
obtained title from Rodrigo under a deed of sale the execution of which impliedly revoked the earlier devise to Rodriguez.

The Ruling of the Court

We find respondents title superior, and thus, affirm the CA.

Naked Title Passed from Rodrigo to Rodriguez Under a Perfected Donation

It is immediately apparent that Rodrigo passed naked title to Rodriguez under a perfected donation inter vivos. First. Rodrigo
stipulated that "if the herein Donee predeceases me, the [Property] will not be reverted to the Donor, but will be inherited by the
heirs of x x x Rodriguez," signaling the irrevocability of the passage of title to Rodriguezs estate, waiving Rodrigos right to reclaim
title. This transfer of title was perfected the moment Rodrigo learned of Rodriguezs acceptance of the disposition 12 which, being
reflected in the Deed, took place on the day of its execution on 3 May 1965. Rodrigos acceptance of the transfer underscores its
essence as a gift in present, not in futuro, as only donations inter vivos need acceptance by the recipient.13 Indeed, had Rodrigo
wished to retain full title over the Property, she could have easily stipulated, as the testator did in another case, that "the donor, may
transfer, sell, or encumber to any person or entity the properties here donated x x x" 14 or used words to that effect. Instead, Rodrigo
expressly waived title over the Property in case Rodriguez predeceases her.
In a bid to diffuse the non-reversion stipulations damning effect on his case, petitioner tries to profit from it, contending it is a
fideicommissary substitution clause.15 Petitioner assumes the fact he is laboring to prove. The question of the Deeds juridical nature,
whether it is a will or a donation, is the crux of the present controversy. By treating the clause in question as mandating
fideicommissary substitution, a mode of testamentary disposition by which the first heir instituted is entrusted with the obligation to
preserve and to transmit to a second heir the whole or part of the inheritance, 16 petitioner assumes that the Deed is a will. Neither
the Deeds text nor the import of the contested clause supports petitioners theory.

Second. What Rodrigo reserved for herself was only the beneficial title to the Property, evident from Rodriguezs undertaking to "give
one [half] x x x of the produce of the land to Apoy Alve during her lifetime." 17 Thus, the Deeds stipulation that "the ownership shall
be vested on [Rodriguez] upon my demise," taking into account the non-reversion clause, could only refer to Rodrigos beneficial
title. We arrived at the same conclusion in Balaqui v. Dongso18 where, as here, the donor, while "b[inding] herself to answer to the
[donor] and her heirs x x x that none shall question or disturb [the donees] right," also stipulated that the donation "does not pass
title to [the donee] during my lifetime; but when I die, [the donee] shall be the true owner" of the donated parcels of land. In finding
the disposition as a gift inter vivos, the Court reasoned:

Taking the deed x x x as a whole, x x x x it is noted that in the same deed [the donor] guaranteed to [the donee] and her heirs and
successors, the right to said property thus conferred. From the moment [the donor] guaranteed the right granted by her to [the
donee] to the two parcels of land by virtue of the deed of gift, she surrendered such right; otherwise there would be no need to
guarantee said right. Therefore, when [the donor] used the words upon which the appellants base their contention that the gift in
question is a donation morts causa [that the gift "does not pass title during my lifetime; but when I die, she shall be the true owner
of the two aforementioned parcels"] the donor meant nothing else than that she reserved of herself the possession and usufruct of
said two parcels of land until her death, at which time the donee would be able to dispose of them freely.19

Indeed, if Rodrigo still retained full ownership over the Property, it was unnecessary for her to reserve partial usufructuary right over
it.20

Third. The existence of consideration other than the donors death, such as the donors love and affection to the donee and the
services the latter rendered, while also true of devises, nevertheless "corroborates the express irrevocability of x x x [inter vivos]
transfers."21 Thus, the CA committed no error in giving weight to Rodrigos statement of "love and affection" for Rodriguez, her niece,
as consideration for the gift, to underscore its finding.

It will not do, therefore, for petitioner to cherry-pick stipulations from the Deed tending to serve his cause (e.g. "the ownership shall
be vested on [Rodriguez] upon my demise" and "devise"). Dispositions bearing contradictory stipulations are interpreted
wholistically, to give effect to the donors intent. In no less than seven cases featuring deeds of donations styled as "morts causa"
dispositions, the Court, after going over the deeds, eventually considered the transfers inter vivos,22 consistent with the principle that
"the designation of the donation as morts causa, or a provision in the deed to the effect that the donation is to take effect at the
death of the donor are not controlling criteria [but] x x x are to be construed together with the rest of the instrument, in order to
give effect to the real intent of the transferor." 23 Indeed, doubts on the nature of dispositions are resolved to favor inter
vivos transfers "to avoid uncertainty as to the ownership of the property subject of the deed." 24

Nor can petitioner capitalize on Rodrigos post-donation transfer of the Property to Vere as proof of her retention of ownership. If
such were the barometer in interpreting deeds of donation, not only will great legal uncertainty be visited on gratuitous dispositions,
this will give license to rogue property owners to set at naught perfected transfers of titles, which, while founded on liberality, is a
valid mode of passing ownership. The interest of settled property dispositions counsels against licensing such practice. 25

Accordingly, having irrevocably transferred naked title over the Property to Rodriguez in 1965, Rodrigo "cannot afterwards revoke the
donation nor dispose of the said property in favor of another." 26 Thus, Rodrigos post-donation sale of the Property vested no title to
Vere. As Veres successor-in-interest, petitioner acquired no better right than him. On the other hand, respondents bought the
Property from Rodriguez, thus acquiring the latters title which they may invoke against all adverse claimants, including petitioner.

G.R. No. 82027 March 29, 1990

ROMARICO G. VITUG, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and ROWENA FAUSTINO-CORONA, respondents.

This case is a chapter in an earlier suit decided by this Court 1 involving the probate of the two wills of the late Dolores Luchangco
Vitug, who died in New York, U. S.A., on November 10, 1980, naming private respondent Rowena Faustino-Corona executrix. In our
said decision, we upheld the appointment of Nenita Alonte as co-special administrator of Mrs. Vitug's estate with her (Mrs. Vitug's)
widower, petitioner Romarico G. Vitug, pending probate.

On January 13, 1985, Romarico G. Vitug filed a motion asking for authority from the probate court to sell certain shares of stock and
real properties belonging to the estate to cover allegedly his advances to the estate in the sum of P667,731.66, plus interests, which
he claimed were personal funds. As found by the Court of Appeals, 2 the alleged advances consisted of P58,147.40 spent for the
payment of estate tax, P518,834.27 as deficiency estate tax, and P90,749.99 as "increment thereto." 3 According to Mr. Vitug, he
withdrew the sums of P518,834.27 and P90,749.99 from savings account No. 35342-038 of the Bank of America, Makati, Metro
Manila.

On April 12, 1985, Rowena Corona opposed the motion to sell on the ground that the same funds withdrawn from savings account
No. 35342-038 were conjugal partnership properties and part of the estate, and hence, there was allegedly no ground for
reimbursement. She also sought his ouster for failure to include the sums in question for inventory and for "concealment of funds
belonging to the estate." 4

Vitug insists that the said funds are his exclusive property having acquired the same through a survivorship agreement executed with
his late wife and the bank on June 19, 1970. The agreement provides:

We hereby agree with each other and with the BANK OF AMERICAN NATIONAL TRUST AND SAVINGS ASSOCIATION
(hereinafter referred to as the BANK), that all money now or hereafter deposited by us or any or either of us with
the BANK in our joint savings current account shall be the property of all or both of us and shall be payable to and
collectible or withdrawable by either or any of us during our lifetime, and after the death of either or any of us shall
belong to and be the sole property of the survivor or survivors, and shall be payable to and collectible or
withdrawable by such survivor or survivors.

We further agree with each other and the BANK that the receipt or check of either, any or all of us during our
lifetime, or the receipt or check of the survivor or survivors, for any payment or withdrawal made for our above-
mentioned account shall be valid and sufficient release and discharge of the BANK for such payment or
withdrawal. 5

The trial courts 6 upheld the validity of this agreement and granted "the motion to sell some of the estate of Dolores L. Vitug, the
proceeds of which shall be used to pay the personal funds of Romarico Vitug in the total sum of P667,731.66 ... ." 7

On the other hand, the Court of Appeals, in the petition for certiorari filed by the herein private respondent, held that the above-
quoted survivorship agreement constitutes a conveyance morts causa which "did not comply with the formalities of a valid will as
prescribed by Article 805 of the Civil Code," 8 and secondly, assuming that it is a mere donation inter vivos, it is a prohibited donation
under the provisions of Article 133 of the Civil Code. 9

The dispositive portion of the decision of the Court of Appeals states:

WHEREFORE, the order of respondent Judge dated November 26, 1985 (Annex II, petition) is hereby set aside
insofar as it granted private respondent's motion to sell certain properties of the estate of Dolores L. Vitug for
reimbursement of his alleged advances to the estate, but the same order is sustained in all other respects. In
addition, respondent Judge is directed to include provisionally the deposits in Savings Account No. 35342-038 with
the Bank of America, Makati, in the inventory of actual properties possessed by the spouses at the time of the
decedent's death. With costs against private respondent. 10

In his petition, Vitug, the surviving spouse, assails the appellate court's ruling on the strength of our decisions in Rivera v. People's
Bank and Trust Co. 11 and Macam v. Gatmaitan 12 in which we sustained the validity of "survivorship agreements" and considering
them as aleatory contracts. 13

The petition is meritorious.

The conveyance in question is not, first of all, one of morts causa, which should be embodied in a will. A will has been defined as "a
personal, solemn, revocable and free act by which a capacitated person disposes of his property and rights and declares or complies
with duties to take effect after his death." 14 In other words, the bequest or device must pertain to the testator. 15 In this case, the
monies subject of savings account No. 35342-038 were in the nature of conjugal funds In the case relied on, Rivera v. People's Bank
and Trust Co., 16 we rejected claims that a survivorship agreement purports to deliver one party's separate properties in favor of the
other, but simply, their joint holdings:

xxx xxx xxx

 ... Such conclusion is evidently predicated on the assumption that Stephenson was the exclusive owner of the
funds-deposited in the bank, which assumption was in turn based on the facts (1) that the account was originally
opened in the name of Stephenson alone and (2) that Ana Rivera "served only as housemaid of the deceased." But
it not infrequently happens that a person deposits money in the bank in the name of another; and in the instant
case it also appears that Ana Rivera served her master for about nineteen years without actually receiving her
salary from him. The fact that subsequently Stephenson transferred the account to the name of himself and/or Ana
Rivera and executed with the latter the survivorship agreement in question although there was no relation of
kinship between them but only that of master and servant, nullifies the assumption that Stephenson was the
exclusive owner of the bank account. In the absence, then, of clear proof to the contrary, we must give full faith
and credit to the certificate of deposit which recites in effect that the funds in question belonged to Edgar
Stephenson and Ana Rivera; that they were joint (and several) owners thereof; and that either of them could
withdraw any part or the whole of said account during the lifetime of both, and the balance, if any, upon the death
of either, belonged to the survivor. 17

xxx xxx xxx

In Macam v. Gatmaitan, 18 it was held:

xxx xxx xxx

This Court is of the opinion that Exhibit C is an aleatory contract whereby, according to article 1790 of the Civil
Code, one of the parties or both reciprocally bind themselves to give or do something as an equivalent for that
which the other party is to give or do in case of the occurrence of an event which is uncertain or will happen at an
indeterminate time. As already stated, Leonarda was the owner of the house and Juana of the Buick automobile
and most of the furniture. By virtue of Exhibit C, Juana would become the owner of the house in case Leonarda
died first, and Leonarda would become the owner of the automobile and the furniture if Juana were to die first. In
this manner Leonarda and Juana reciprocally assigned their respective property to one another conditioned upon
who might die first, the time of death determining the event upon which the acquisition of such right by the one or
the other depended. This contract, as any other contract, is binding upon the parties thereto. Inasmuch as
Leonarda had died before Juana, the latter thereupon acquired the ownership of the house, in the same manner as
Leonarda would have acquired the ownership of the automobile and of the furniture if Juana had died first. 19

xxx xxx xxx

There is no showing that the funds exclusively belonged to one party, and hence it must be presumed to be conjugal, having been
acquired during the existence of the marita. relations. 20

Neither is the survivorship agreement a donation inter vivos, for obvious reasons, because it was to take effect after the death of one
party. Secondly, it is not a donation between the spouses because it involved no conveyance of a spouse's own properties to the
other.

It is also our opinion that the agreement involves no modification petition of the conjugal partnership, as held by the Court of
Appeals, 21 by "mere stipulation" 22 and that it is no "cloak" 23 to circumvent the law on conjugal property relations. Certainly, the
spouses are not prohibited by law to invest conjugal property, say, by way of a joint and several bank account, more commonly
denominated in banking parlance as an "and/or" account. In the case at bar, when the spouses Vitug opened savings account No.
35342-038, they merely put what rightfully belonged to them in a money-making venture. They did not dispose of it in favor of the
other, which would have arguably been sanctionable as a prohibited donation. And since the funds were conjugal, it can not be said
that one spouse could have pressured the other in placing his or her deposits in the money pool.

The validity of the contract seems debatable by reason of its "survivor-take-all" feature, but in reality, that contract imposed a mere
obligation with a term, the term being death. Such agreements are permitted by the Civil Code. 24

Under Article 2010 of the Code:

ART. 2010. By an aleatory contract, one of the parties or both reciprocally bind themselves to give or to do
something in consideration of what the other shall give or do upon the happening of an event which is uncertain,
or which is to occur at an indeterminate time.

Under the aforequoted provision, the fulfillment of an aleatory contract depends on either the happening of an event which is (1)
"uncertain," (2) "which is to occur at an indeterminate time." A survivorship agreement, the sale of a sweepstake ticket, a transaction
stipulating on the value of currency, and insurance have been held to fall under the first category, while a contract for life annuity or
pension under Article 2021, et sequenta, has been categorized under the second. 25 In either case, the element of risk is present. In
the case at bar, the risk was the death of one party and survivorship of the other.

However, as we have warned:

xxx xxx xxx

 But although the survivorship agreement is per se not contrary to law its operation or effect may be violative of the
law. For instance, if it be shown in a given case that such agreement is a mere cloak to hide an inofficious donation,
to transfer property in fraud of creditors, or to defeat the legitime of a forced heir, it may be assailed and annulled
upon such grounds. No such vice has been imputed and established against the agreement involved in this case. 26

xxx xxx xxx

There is no demonstration here that the survivorship agreement had been executed for such unlawful purposes, or, as held by the
respondent court, in order to frustrate our laws on wills, donations, and conjugal partnership.

The conclusion is accordingly unavoidable that Mrs. Vitug having predeceased her husband, the latter has acquired upon her death a
vested right over the amounts under savings account No. 35342-038 of the Bank of America. Insofar as the respondent court ordered
their inclusion in the inventory of assets left by Mrs. Vitug, we hold that the court was in error. Being the separate property of
petitioner, it forms no more part of the estate of the deceased.

G.R. No. 111904 October 5, 2000

SPS. AGRIPINO GESTOPA and ISABEL SILARIO GESTOPA, petitioners,
vs.
COURT OF APPEALS and MERCEDES DANLAG y PILAPIL, respondents.

Spouses Diego and Catalina Danlag were the owners of six parcels of unregistered lands. They executed three deeds of
donation morts causa, two of which are dated March 4, 1965 and another dated October 13, 1966, in favor of private respondent
Mercedes Danlag-Pilapil.4 The first deed pertained to parcels 1 & 2 with Tax Declaration Nos. 11345 and 11347, respectively. The
second deed pertained to parcel 3, with TD No. 018613. The last deed pertained to parcel 4 with TD No. 016821. All deeds contained
the reservation of the rights of the donors (1) to amend, cancel or revoke the donation during their lifetime, and (2) to sell,
mortgage, or encumber the properties donated during the donors' lifetime, if deemed necessary.

On January 16, 1973, Diego Danlag, with the consent of his wife, Catalina Danlag, executed a deed of donation inter vivos5 covering
the aforementioned parcels of land plus two other parcels with TD Nos. 11351 and 11343, respectively, again in favor of private
respondent Mercedes. This contained two conditions, that (1) the Danlag spouses shall continue to enjoy the fruits of the land
during their lifetime, and that (2) the donee can not sell or dispose of the land during the lifetime of the said spouses, without
their prior consent and approval. Mercedes caused the transfer of the parcels' tax declaration to her name and paid the taxes on
them.

On June 28, 1979 and August 21, 1979, Diego and Catalina Danlag sold parcels 3 and 4 to herein petitioners, Mr. and Mrs. Agripino
Gestopa. On September 29, 1979, the Danlags executed a deed of revocation 6 recovering the six parcels of land subject of the
aforecited deed of donation inter vivos.

On March 1, 1983, Mercedes Pilapil (herein private respondent) filed with the RTC a petition against the Gestopas and the Danlags,
for quieting of title7 over the above parcels of land. She alleged that she was an illegitimate daughter of Diego Danlag; that she lived
and rendered incalculable beneficial services to Diego and his mother, Maura Danlag, when the latter was still alive. In recognition of
the services she rendered, Diego executed a Deed of Donation on March 20, 1973, conveying to her the six (6) parcels of land. She
accepted the donation in the same instrument, openly and publicly exercised rights of ownership over the donated properties, and
caused the transfer of the tax declarations to her name. Through machination, intimidation and undue influence, Diego persuaded
the husband of Mercedes, Eulalio Pilapil, to buy two of the six parcels covered by the deed of donation. Said donation inter vivos was
coupled with conditions and, according to Mercedes, since its perfection, she had complied with all of them; that she had not been
guilty of any act of ingratitude; and that respondent Diego had no legal basis in revoking the subject donation and then in selling the
two parcels of land to the Gestopas.

In their opposition, the Gestopas and the Danlags averred that the deed of donation dated January 16, 1973 was null and void
because it was obtained by Mercedes through machinations and undue influence. Even assuming it was validly executed, the
intention was for the donation to take effect upon the death of the donor. Further, the donation was void for it left the donor, Diego
Danlag, without any property at all.

ISSUE

Crucial in resolving whether the donation was inter vivos or mortis causa is the determination of whether the donor intended to
transfer the ownership over the properties upon the execution of the deed. 11

In ascertaining the intention of the donor, all of the deed's provisions must be read together. 12 The deed of donation dated January
16, 1973, in favor of Mercedes contained the following:

"That for and in consideration of the love and affection which the Donor inspires in the Donee and as an act of liberality and
generosity, the Donor hereby gives, donates, transfer and conveys by way of donation unto the herein Donee, her heirs, assigns and
successors, the above-described parcels of land;

That it is the condition of this donation that the Donor shall continue to enjoy all the fruits of the land during his lifetime and that of
his spouse and that the donee cannot sell or otherwise, dispose of the lands without the prior consent and approval by the Donor
and her spouse during their lifetime.

xxx

That for the same purpose as hereinbefore stated, the Donor further states that he has reserved for himself sufficient properties in
full ownership or in usufruct enough for his maintenance of a decent livelihood in consonance with his standing in society.

That the Donee hereby accepts the donation and expresses her thanks and gratitude for the kindness and generosity of the Donor." 13

RULING
Note first that the granting clause shows that Diego donated the properties out of love and affection for the donee. This is a mark
of a donation inter vivos.14

Second, the reservation of lifetime usufruct indicates that the donor intended to transfer the naked ownership over the
properties. As correctly posed by the Court of Appeals, what was the need for such reservation if the donor and his spouse
remained the owners of the properties?

Third, the donor reserved sufficient properties for his maintenance in accordance with his standing in society, indicating that the
donor intended to part with the six parcels of land. 15

Lastly, the donee accepted the donation. In the case of Alejandro vs. Geraldez, 78 SCRA 245 (1977), we said that an acceptance
clause is a mark that the donation is inter vivos. Acceptance is a requirement for donations inter vivos. Donations mortis causa,
being in the form of a will, are not required to be accepted by the donees during the donors' lifetime.

Consequently, the Court of Appeals did not err in concluding that the right to dispose of the properties belonged to the donee. The
donor's right to give consent was merely intended to protect his usufructuary interests . In Alejandro, we ruled that a limitation on
the right to sell during the donors' lifetime implied that ownership had passed to the donees and donation was already effective
during the donors' lifetime.

Was the revocation valid? A valid donation, once accepted, becomes irrevocable, except on account of officiousness, failure by the
donee to comply with the charges imposed in the donation, or ingratitude. 19 The donor-spouses did not invoke any of these reasons
in the deed of revocation. The deed merely stated:

"WHEREAS, while the said donation was a donation Inter Vivos, our intention thereof is that of Mortis Causa so as we could be sure
that in case of our death, the above-described properties will be inherited and/or succeeded by Mercedes Danlag de Pilapil; and that
said intention is clearly shown in paragraph 3 of said donation to the effect that the Donee cannot dispose and/or sell the properties
donated during our life-time, and that we are the one enjoying all the fruits thereof." 20

Petitioners cited Mercedes' vehemence in prohibiting the donor to gather coconut trees and her filing of instant petition for quieting
of title. There is nothing on record, however, showing that private respondent prohibited the donors from gathering coconuts. Even
assuming that Mercedes prevented the donor from gathering coconuts, this could hardly be considered an act covered by Article 765
of the Civil Code.21 Nor does this Article cover respondent's filing of the petition for quieting of title, where she merely asserted what
she believed was her right under the law.

Finally, the records do not show that the donor-spouses instituted any action to revoke the donation in accordance with Article 769
of the Civil Code.22 Consequently, the supposed revocation on September 29, 1979, had no legal effect.
G.R. No. 210987 November 24, 2014
THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE COMPANY, Petitioner,
vs.
THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL REVENUE, Respondents.

The Facts
Petitioner The Philippine American Life and General Insurance Company (Philamlife) used to own 498,590 Class A shares in Philam
Care Health Systems, Inc. (PhilamCare), representing 49.89% of the latter's outstanding capital stock. In 2009, petitioner, in a bid to
divest itself of its interests in the health maintenance organization industry, offered to sell its shareholdings in PhilamCare through
competitive bidding. Thus, on September 24, 2009, petitioner's Class A shares were sold for USD 2,190,000, or PhP 104,259,330
based on the prevailing exchange rate at the time of the sale, to STI Investments, Inc., who emerged as the highest bidder. 3

After the sale was completed and the necessary documentary stamp and capital gains taxes were paid, Philamlife filed an application
for a certificate authorizing registration/tax clearance with the Bureau of Internal Revenue (BIR) Large Taxpayers Service Division to
facilitate the transfer of the shares. Months later, petitioner was informed that it needed to secure a BIR ruling in connection with its
application due to potential donors tax liability. In compliance, petitioner, on January 4, 2012, requested a ruling 4 to confirm that the
sale was not subject to donors tax, pointing out, in its request, the following: that the transaction cannot attract donors tax liability
since there was no donative intent and,ergo, no taxable donation, citing BIR Ruling [DA-(DT-065) 715-09] dated November 27,
2009;5 that the shares were sold at their actual fair market value and at arms length; that as long as the transaction conducted is at
arms lengthsuch that a bona fide business arrangement of the dealings is done inthe ordinary course of businessa sale for less
than an adequate consideration is not subject to donors tax; and that donors tax does not apply to saleof shares sold in an open
bidding process.

On January 4, 2012, however, respondent Commissioner on Internal Revenue (Commissioner) denied Philamlifes request through
BIR Ruling No. 015-12. As determined by the Commissioner, the selling price of the shares thus sold was lower than their book
value based on the financial statements of PhilamCare as of the end of 2008. 6 As such, the Commisioner held, donors tax became
imposable on the price difference pursuant to Sec. 100 of the National Internal Revenue Code (NIRC), viz:

SEC. 100. Transfer for Less Than Adequate and full Consideration.- Where property, other than real property referred to in Section
24(D), is transferred for less than an adequate and full consideration in money or moneys worth, then the amount by which the fair
market value of the property exceeded the value of the consideration shall, for the purpose of the tax imposed by this Chapter, be
deemed a gift, and shall be included in computing the amount of gifts made during the calendar year.

The afore-quoted provision, the Commissioner added, is implemented by Revenue Regulation 6-2008 (RR 6-2008), which provides:
(c.2) Definition of fair market valueof Shares of Stock. For purposes of this Section, fair market value of the share of stock sold
shall be:
xxxx

(c.2.2) In the case of shares of stock not listed and traded in the local stock exchanges, the book value of the shares of stock as
shown in the financial statements duly certified by an independent certified public accountant nearest to the date of sale shall be the
fair market value.

In view of the foregoing, the Commissioner ruled that the difference between the book value and the selling price in the sales
transaction is taxable donation subject to a 30% donors tax under Section 99(B) of the NIRC. 7Respondent Commissioner likewise
held that BIR Ruling [DA-(DT-065) 715-09], on which petitioner anchored its claim, has already been revoked by Revenue
Memorandum Circular (RMC) No. 25-2011.8

PROCEDURAL ISSUE
To recapitulate, three different, if not conflicting, positions as indicated below have been advanced by the parties and by the CA as
the proper remedy open for assailing respondents rulings:
1. Petitioners: The ruling of the Commissioner is subject to review by the Secretary under Sec. 4 of the NIRC, and that of the
Secretary to the CA via Rule 43;
2. Respondents: The ruling of the Commissioner is subject to review by the Secretary under Sec. 4 of the NIRC, and that of
the Secretary to the Office of the President before appealing to the CA via a Rule 43 petition; and
3. CA: The ruling of the Commissioner is subject to review by the CTA.

We now resolve.

Preliminarily, it bears stressing that there is no dispute that what is involved herein is the respondent Commissioners exercise of
power under the first paragraph of Sec. 4 of the NIRCthe power to interpret tax laws. This, in fact, was recognized by the appellate
court itself, but erroneously held that her action in the exercise of such power is appealable directly to the CTA. As correctly pointed
out by petitioner, Sec. 4 of the NIRC readily provides that the Commissioners power to interpret the provisions of this Code and
other tax laws is subject to review by the Secretary of Finance. The issue that now arises is thiswhere does one seek immediate
recourse from the adverse ruling of the Secretary of Finance in its exercise of its power of review under Sec. 4?
Admittedly, there is no provision in law that expressly provides where exactly the ruling of the Secretary of Finance under the
adverted NIRC provision is appealable to. However, We find that Sec. 7(a)(1) of RA 1125, as amended, addresses the seeming gap in
the law asit vests the CTA, albeit impliedly, with jurisdiction over the CA petition as "other matters" arising under the NIRC or other
laws administered by the BIR. As stated:
Sec. 7. Jurisdiction.- The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:

1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees
or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue or other laws
administered by the Bureau of Internal Revenue. (emphasis supplied)

Even though the provision suggests that it only covers rulings of the Commissioner, We hold that it is, nonetheless, sufficient
enough to include appeals from the Secretarys review under Sec. 4 of the NIRC. Reviews by the Secretary of Finance pursuant to
Sec. 4 of the NIRC are appealable to the CTA

Indeed, to leave undetermined the mode of appeal from the Secretary of Finance would be an injustice to taxpayers prejudiced by
his adverse rulings. To remedy this situation, Weimply from the purpose of RA 1125 and its amendatory laws that the CTA is the
proper forum with which to institute the appeal. This is not, and should not, in any way, be taken as a derogation of the power of
the Office of President but merely as recognition that matters calling for technical knowledge should be handled by the agency or
quasi-judicial body with specialization over the controversy. As the specialized quasi-judicial agency mandated to adjudicate tax,
customs, and assessment cases, there can be no other court of appellate jurisdiction that can decide the issues raised inthe CA
petition, which involves the tax treatment of the shares of stocks sold

The appellate power of the CTA includes certiorari

Petitioner is quick to point out, however, that the grounds raised in its CA petition included the nullity of Section 7(c.2.2) of RR 06-08
and RMC 25-11. In an attempt to divest the CTA jurisdiction over the controversy, petitioner then cites British American Tobacco,
wherein this Court has expounded on the limited jurisdiction of the CTA in the following wise:

In the case at bar, the assailed revenue regulations and revenue memorandum circulars are actually rulings or opinions of the CIR on
the tax treatment of motor vehicles sold at public auction within the SSEZ to implement Section 12 of R.A. No. 7227 which provides
that "exportation or removal of goods from the territory of the [SSEZ] to the other parts of the Philippine territory shall be subject to
customs duties and taxes under the Customs and Tariff Codeand other relevant tax laws of the Philippines." They were issued
pursuant to the power of the CIR under Section 4 of the National Internal Revenue Code x x x. 24 (emphasis added)

The respective teachings in British American Tobacco and Asia International Auctioneers, at first blush, appear to bear no
conflictthat when the validity or constitutionality of an administrative rule or regulation is assailed, the regular courts have
jurisdiction; and if what is assailed are rulings or opinions of the Commissioner on tax treatments, jurisdiction over the
controversy is lodged with the CTA. The problem with the above postulates, however, is that they failed to take into consideration
one crucial pointa taxpayer can raise both issues simultaneously.

The prevailing doctrine is that the authority to issue writs of certiorari involves the exercise of original jurisdiction which must be
expressly conferred by the Constitution or by law and cannot be implied from the mere existence of appellate jurisdiction. Thus, x x x
this Court has ruled against the jurisdiction of courts or tribunals over petitions for certiorari on the ground that there is no law
which expressly gives these tribunals such power. Itmust be observed, however, that x x x these rulings pertain not to regular courts
but to tribunals exercising quasijudicial powers. With respect tothe Sandiganbayan, Republic Act No. 8249 now provides that the
special criminal court has exclusive original jurisdiction over petitions for the issuance of the writs of mandamus, prohibition,
certiorari, habeas corpus, injunctions, and other ancillary writs and processes in aid of its appellate jurisdiction.

The foregoing notwithstanding, while there is no express grant of such power, with respect to the CTA, Section 1, Article VIII of the
1987 Constitution provides, nonetheless, that judicial power shall be vested in one Supreme Court and in such lower courts as may
be established by law and that judicial power includes the duty of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.

On the strength of the above constitutional provisions, it can be fairly interpreted that the power of the CTA includes that of
determining whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the
RTC in issuing an interlocutory order in cases falling within the exclusive appellate jurisdiction of the tax court. It, thus, follows that
the CTA, by constitutional mandate, is vested with jurisdiction to issue writs of certiorari in these cases.

Indeed, in order for any appellate court to effectively exercise its appellate jurisdiction, it must have the authority to issue, among
others, a writ of certiorari. In transferring exclusive jurisdiction over appealed tax cases to the CTA, it can reasonably be assumed
that the law intended to transfer also such power as is deemed necessary, if not indispensable, in aid of such appellate
jurisdiction. There is no perceivable reason why the transfer should only be considered as partial, not total. (emphasis added)
Guided by the doctrinal teaching in resolving the case at bar, the fact that the CA petition not only contested the applicability of
Sec. 100 of the NIRC over the sales transaction but likewise questioned the validity of Sec. 7 (c.2.2) of RR 06-08 and RMC 25-11
does not divest the CTA of its jurisdiction over the controversy, contrary to petitioner's arguments.

The price difference is subject to donor's tax

Petitioner's substantive arguments are unavailing. The absence of donative intent, if that be the case, does not exempt the sales
of stock transaction from donor's tax since Sec. 100 of the NIRC categorically states that the amount by which the fair market
value of the property exceeded the value of the consideration shall be deemed a gift. 1Thus, even if there is no actual donation,
the difference in price is considered a donation by fiction of law.

Moreover, Sec. 7(c.2.2) of RR 06-08 does not alter Sec. 100 of the NIRC but merely sets the parameters for determining the "fair
market value" of a sale of stocks. Such issuance was made pursuant to the Commissioner's power to interpret tax laws and to
promulgate rules and regulations for their implementation.

Lastly, petitioner is mistaken in stating that RMC 25-11, having been issued after the sale, was being applied retroactively in
contravention to Sec. 246 of the NIRC. 26 Instead, it merely called for the strict application of Sec. 100, which was already in force the
moment the NIRC was enacted.