G.R. No. 125888. August 13, 1998.
SPOUSES ERNESTO and EVELYN SICAD, petitioners, vs. COURT OF APPEALS, CATALINO VALDERRAMA, JUDY CRISTINA M. VALDERRAMA and JESUS ANTONIO VALDERRAMA, respondents.

FACTS

Aurora Virto Vda. de Montinola executed a document entitled “DEED OF DONATION INTER VIVOS” on December 11, 1979, in favor of her grandchildren, Catalino Valderrama, Judy Cristina Valderrama, and Jesus Antonio Valderrama, covering a parcel of land. The donees signed the deed, accepting the donation. The deed was registered, resulting in the cancellation of Montinola’s TCT No. T-16105 and the issuance of TCT No. T-16622 in the names of the donees on February 7, 1980. However, Montinola retained possession of the owner’s duplicate copy of the new title and the property itself. On March 12, 1987, Montinola executed a deed revoking the donation and caused its annotation as an adverse claim on the title. On August 24, 1990, she filed a petition with the Regional Trial Court to cancel TCT No. T-16622 and reinstate her original title, arguing the donation was mortis causa and void for non-compliance with the formalities of a will. The donees opposed, contending the donation was inter vivos and valid. The Trial Court ruled the donation was inter vivos and dismissed Montinola’s petition. Montinola appealed to the Court of Appeals but died during its pendency. The Court of Appeals allowed the substitution of Montinola’s legal heirs and the joinder of the spouses Ernesto and Evelyn Sicad, who claimed ownership through a subsequent sale from Montinola. The Court of Appeals affirmed the Trial Court’s decision. The Sicad Spouses appealed to the Supreme Court.

ISSUE

Whether the deed of donation executed by Aurora Montinola is inter vivos or mortis causa.

RULING

The Supreme Court ruled the donation was mortis causa and therefore void for non-compliance with the formalities of a will. The Court set aside the decisions of the Court of Appeals and the Regional Trial Court, declared the Deed of Donation Inter Vivos null and void, and directed the Register of Deeds to cancel TCT No. T-16622 and reinstate TCT No. T-16105. The Court found the donor’s intention, as demonstrated by the circumstances, was to transfer ownership only after her death. Critical factors included: 1) the insertion of a proviso, at the donor’s instruction, prohibiting the donees from selling or encumbering the property within ten years after the donor’s death; 2) the donor retained possession of the property, enjoyed its fruits, paid taxes, and kept the new certificate of title; and 3) the donor consistently treated the property as her own, executing a deed of revocation and later selling it to the Sicad spouses. These acts showed the donor retained the essential rights of ownership (usufruct and disposition) during her lifetime, with transmission to the donees intended to occur only after her death, characteristic of a donation mortis causa.