THIRD DIVISION

[G.R. No. 110335. June 18, 2001.]

IGNACIO GONZALES, LILIA R. GONZALES, GUSTAVO R. GONZALES,

WIGBERTO R. GONZALES, GILDA GONZALES-SALUTA, FERNANDO
RAMIREZ, OCTAVIO RAMIREZ, JR., IGNACIO RAMIREZ, ESMIRNA
RAMIREZ, MERCEDES GONZALES-FAVIZ, JAIME GONZALES,
FEDERICO GONZALES, ROSARIO GONZALES, PATRICIA GONZALES,
DANIEL GONZALES, ALDO GONZALES, CLAUDIA GONZALES and
AMANDA GONZALES , petitioners, vs . HONORABLE COURT OF
APPEALS, ESTANISLAO SALVADOR, MATEO SALVADOR, ALBERTO
SARMIENTO, MAXIMO ESGUERRA, MAMERTO ANTONIO, VIRGILIO
DE GUZMAN, ANGEL FAJARDO, ABAD DELA CRUZ, PEDRO FAJARDO,
JUANITO DE LARA, ELIGIO DE GUZMAN, SALVADOR MARTINEZ,
EDUARDO DELA CRUZ, JOSE MATIAS, SOLEDAD ESTRELLA, ROMAN
GUINGON, CIRILO SALVADOR, CATALINA DE LA CRUZ, BERNARDO
ESGUERRA, JR., GLORIA CABANA, PAQUITO CHAVEZ, RENATO
GARCIA, FRANCISCO PASCUAL, WALDO SALVADOR, MARIO
SALVADOR, PEDRO GARCIA, ALBINO SALVADOR, ANTONIO DE
GUZMAN, AMBROCIO SALVADOR, TERESITA CAPATE, EDUARDO
TALENS, BENIGNO CARAIG, ERNESTO BERNABE, SERGIO CARLOS,
SIMEON BALINGAY, ANTONIO NANGEL, TEOFILO BINUYA and
WILFREDO DELA CRUZ , respondents.

San Jose Enriquez Lacas Santos Borje & Vendero for petitioners.
Joventino A. Cornista and Irineo G. Calderon for private respondents.

SYNOPSIS

The late spouses Ignacio Gonzales and Marina Gonzales were the registered owners of
two parcels of agricultural Land situated at Barrio Fortaleza, Cabanatuan City, covered by
Transfer Certificate of Title No. 2742 and denominated as Lot 551-C and Lot 552-A. Lot
551-C contains an area of 46.97 hectares while Lot 552-A contains an area of 37.5735
hectares. Prior to the partition of said estate, Ignacio Gonzales executed a Deed of
Donation on July 12, 1972 conveying his share of the property, specifically Lot No. 551-C,
in favor of his 14 grandchildren, herein petitioners. The said donation was not registered.
When Presidential Decree No. 27 took effect on October 21, 1972, the landholdings of the
spouses Gonzales were placed under "Operation Land Transfer" by virtue of said decree,
and private respondents were accordingly issued the corresponding Certificates of Land
Transfer and Emancipation Patents. The administratrix, Lilia Gonzales, filed an application
for retention with the then Ministry of Agrarian Reform, requesting that their property be
excluded from the coverage of Operation Land Transfer. On September 3, 1991,
Department of Agrarian Reform Secretary Benjamin Leong issued an order declaring that
the subject landholdings covered by the deed of donation are exempt from Operation Land
Transfer, and cancelling the Certificates of Land Transfer issued in favor of private
respondents. Aggrieved by this ruling, private respondents filed a petition for certiorari
with the Court of Appeals which rendered its decision on March 15, 1993, reversing the
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 action of the DAR and upholding the certificates of land transfer and emancipation
patents. Petitioners moved for a reconsideration of the above decision, but the same was
denied by the Court of Appeals. Hence, the present petition. The sole issue to be resolved
is whether the property subject of the deed of donation which was not registered when PD.
No. 27 took effect, should be excluded from the Operation Land Transfer.
The Supreme Court affirmed the decision of the Court of Appeals. The Court ruled that
although the non-registration of a deed of donation shall not affect its validity, the
necessity of registration comes into play when the rights of third persons are affected, as
in the case at bar. According to the Court, while the donation executed by Ignacio Gonzales
in favor of his grandchildren was in writing and duly notarized, it was not, however,
registered in accordance with law and, therefore, not binding upon private respondents
who did not participate in said deed or had no actual knowledge thereof. Hence, while the
deed of donation is valid between the donor and the donees, such deed, however, did not
bind the tenants-farmers who were not parties to the donation. It is of no moment that the
right of the tenants-farmers in this case was created by virtue of a decree or law. They are
still considered "third persons" contemplated in our laws on registration, for the fact
remains that herein private respondents tenants-farmers had no actual knowledge of the
deed of donation.

SYLLABUS

1. CIVIL LAW; DONATION; AS BETWEEN PARTIES TO A DONATION OF AN

IMMOVABLE PROPERTY, ALL THAT IS REQUIRED IS FOR SAID DONATION TO BE
CONTAINED IN A PUBLIC DOCUMENT; REGISTRATION NOT NECESSARY FOR IT TO BE
CONSIDERED VALID AND EFFECTIVE. — Article 749 of the Civil Code provides inter alia
that "in order that the donation of an immovable may be valid, it must be made in a public
document, specifying therein the property donated and the value of the charges which the
donee must satisfy." Corollarily, Article 709 of the same Code explicitly states that "the
titles of ownership, or other rights over immovable property, which are not duly inscribed
or annotated in the Registry of Property shall not prejudice third persons." From the
foregoing provisions, it may be inferred that as between the parties to a donation of an
immovable property, all that is required is for said donation to be contained in a public
document. Registration is not necessary for it to be considered valid and effective.
2. ID.; ID.; MUST BE REGISTERED IN THE REGISTRY OF LAND TITLES AND DEEDS TO
BIND THIRD PERSONS. — In order to bind third persons, the donation must be registered in
the Registry of Property (now Registry of Land Titles and Deeds). Although the non-
registration of a deed of donation shall not affect its validity, the necessity of registration
comes into play when the rights of third persons are affected, as in the case at bar. It is
actually the act of registration that operates to convey registered land or affect title
thereto. Further, it is an entrenched doctrine in our jurisdiction that registration in a public
registry creates constructive notice to the whole world (Olizon vs. Court of Appeals, 236
SCRA 148 [1994]).
3. ID.; ID.; NON-REGISTRATION OF A DEED OF DONATION DOES NOT BIND OTHER
PARTIES IGNORANT OF A PREVIOUS TRANSACTION. — It is undisputed in this case that
the donation executed by Ignacio Gonzales in favor of his grandchildren, although in writing
and duly notarized, has not been registered in accordance with law. For this reason, it shall
not be binding upon private respondents who did not participate in said deed or had no
actual knowledge thereof. Hence, while the deed of donation is valid between the donor
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 and the donees, such deed, however, did not bind the tenants-farmers who were not
parties to the donation. As previously enunciated by this Court, non-registration of a deed
of donation does not bind other parties ignorant of a previous transaction (Sales vs. Court
of Appeals, 211 SCRA 858 [1992]). So it is of no moment that the right of the tenants-
farmers in this case was created by virtue of a decree or law. They are still considered
"third persons" contemplated in our laws on registration, for the fact remains that these
tenants-farmers had no actual knowledge of the deed of donation.
4. LABOR AND SOCIAL LEGISLATION; PRESIDENTIAL DECREE NO. 27; UNREGISTERED
DEED OF DONATION CANNOT OPERATE TO EXCLUDE SUBJECT LAND FROM COVERAGE
OF OPERATION LAND TRANSFER THEREOF. — The ineluctable conclusion drawn is that the
unregistered deed of donation cannot operate to exclude the subject land from the
coverage of the Operation Land Transfer of P.D. No. 27, which took effect on October 21,
1972. To rule otherwise would render ineffectual the rights and interests that the tenants-
farmers immediately acquired upon the promulgation of P.D. No. 27, especially so because
in the case at bar, they have been cultivating the land even before World War II.
Accordingly, the Certificates of Land Transfer and the Emancipation Patents respectively
issued to private respondents over the land in question cannot be cancelled. It should be
noted that one of the recognized modes of acquiring title to land is by emancipation
patent which aims to ameliorate the sad plight of tenants-farmers. By virtue of P.D. No. 27,
tenants-farmers are deemed owners of the land they till. This policy is intended to be given
effect by a provision of the law which declares that, "the tenant-farmer, whether in land
classified as landed estate or not, shall be DEEMED OWNER of a portion constituting a
family size farm of five (5) hectares if not irrigated and three (3) hectares if irrigated" (P.D.
No. 27, third paragraph). It may, therefore, be said that with respect to Lot 551-C, private
respondents became owners thereof on October 27, 1972, the day P.D. No. 27 took effect.
5. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT; COURT COMPELLED TO REVIEW
FACTUAL FINDINGS OF COURT OF APPEALS IF AT VARIANCE WITH THOSE OF THE
DEPARTMENT OF AGRARIAN REFORM. — We have consistently ruled that it is not the
function of this Court to assess and evaluate the evidence all over again, its jurisdiction
being generally limited to reviewing errors of law that might have been committed by the
lower court. Nevertheless, since the factual findings of the Court of Appeals are at variance
with those of an administrative agency such as the Department of Agrarian Reform, we are
compelled to review the records presented both in the Court of Appeals and the said
Department (Deiparine vs. Court of Appeals, 299 SCRA 668 [1998]). Moreover, in the
exercise of sound discretion and considering the fact that the parties have relentlessly
pursued this case since 1974 or for a period of 27 years already, this Court has opted to
look into the factual bases of the assailed decision of the Court of Appeals.
6. ID.; ID.; ID.; IF MADE BY COURT OF APPEALS ARE CONCLUSIVE AND BINDING ON
SUPREME COURT EVEN IF CONTRARY TO THOSE OF TRIAL COURT OR ADMINISTRATIVE
AGENCY, SO LONG AS SUCH FINDINGS ARE SUPPORTED BY THE RECORDS OR BASED ON
SUBSTANTIAL EVIDENCE. — We affirm the conclusion of the appellate court that the land
subject of the donation is covered by Operation Land Transfer. The findings of fact made
by the Court of Appeals are conclusive and binding on the Supreme Court even if contrary
to those of the trial court or the administrative agency, so long as such findings are
supported by the records or based on substantial evidence (Tabaco vs. Court of Appeals,
239 SCRA 485 [1994]). While the foregoing doctrine is not absolute, petitioners have not
sufficiently proved that the findings complained of are totally devoid of support in the
records, or that they are so glaringly erroneous as to constitute serious abuse of
discretion.
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 DECISION

MELO , J : p

Per A.M. No. 00-9-03-SC dated February 27, 2001, this case which could have been acted
upon earlier, was raffled to undersigned ponente. Essentially, petitioners seek to annul and
set aside the decision dated March 15, 1993 of the Court of Appeals in its CA-G.R. SP No.
26416 which reversed the ruling of then Secretary of Agrarian Reform Benjamin T. Leong,
as well as the order dated May 17, 1993 denying reconsideration thereof.
The factual antecedents of the instant case may be chronicled as follows:
The now deceased spouses Ignacio Gonzales and Marina Gonzales were the registered
owners of two parcels of agricultural land situated at Barrio Fortaleza, Cabanatuan City,
covered by Transfer Certificate of Title No. 2742 and denominated as Lot 551-C and Lot
552-A. Lot 551-C contains an area of 46.97 hectares while Lot 552-A contains an area of
37.5735 hectares. Herein petitioners are the successors-in-interest or the children and
grandchildren of said Gonzales spouses. On the other hand, private respondents are the
farmers and tenants of said spouses who have been cultivating the parcels of land even
before World War II either personally or through their predecessors-in-interest.
On May 7, 1969, Marina Gonzales died intestate and appointed as administratrix of her
estate was petitioner Lilia Gonzales. Prior to the partition of said estate, Ignacio Gonzales
executed a Deed of Donation on July 12, 1972 conveying his share of the property,
specifically Lot No. 551-C, in favor of his 14 grandchildren. The said donation was not
registered. Thus, when Presidential Decree No. 27 (P.D. No. 27) took effect on October 21,
1972, the landholdings of the spouses Gonzales were placed under Operation Land
Transfer by virtue of said decree, and private respondents were accordingly issued the
corresponding Certificates of Land Transfer and Emancipation Patents. On March 5, 1974,
the administratrix Lilia Gonzales filed an application for retention with the then Ministry of
Agrarian Reform, requesting that their property be excluded from the coverage of
Operation Land Transfer. After initial investigation, Hearing Officer Melchor Pagsolingan
recommended the denial of said application for retention and this action was affirmed by
Assistant Secretary of Agrarian Reform Benjamin Labayen, in an order dated September
12, 1977. Apparently, however, a reinvestigation was conducted, resulting in the present
Department of Agrarian Reform (DAR) resolution dated February 23, 1983 recommending
that the land subject of the deed of donation, or Lot No. 551-C, be exempt from Operation
Land Transfer. On September 3, 1991, DAR Secretary Benjamin Leong issued an order
declaring that the subject landholdings covered by the deed of donation are exempt from
Operation Land Transfer, and cancelling the Certificates of Land Transfer issued in favor of
private respondents. In so ruling, the DAR Secretary reasoned:
As the donation had been duly accepted by the donees who were already of legal age on the date
of the donation and by the legal guardians of the donees who were still minors at that time, and
the donor having known of said acceptance, the donation had therefore been perfected in
accordance with the law, and the donees had acquired a valid title to the portion donated on the
date the instrument was executed.

(p. 4, DAR Order.)

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 Aggrieved by this ruling, private respondents filed a petition for certiorari with the Court of
Appeals which rendered its decision on March 15, 1993, reversing the action of the DAR
and upholding the certificates of land transfer and emancipation patents.
Petitioners moved for a reconsideration of the above decision but the same was denied by
the Court of Appeals in its Resolution dated May 17, 1993.
Thus, the instant petition anchored on the following grounds:
A. the CA failed to reconsider that the land subject of this case does
not fall within the purview of P.D. 27;
B. the CA should have found that the evidence clearly shows that the
tenants (private respondents herein) were aware that the land had
been donated by Ignacio Gonzales in favor of his grandchildren
prior to the effectivity of P.D. 27; and
C. the effect of non-registration under the land registration laws are
inapplicable to the present case.

The first and third assigned errors, being interrelated, shall be jointly discussed.
The sole issue to be resolved is whether the property subject of the deed of donation
which was not registered when P.D. No. 27 took effect, should be excluded from the
Operation Land Transfer.
Petitioners insist that the deed of donation executed by Ignacio Gonzales validly
transferred the ownership and possession of Lot 551-C which comprises an area of 46.97
hectares to his 14 grandchildren. They further assert that inasmuch as Lot 551-C had
already been donated, the same can no longer fall within the purview of P.D. No. 27, since
each donee shall have a share of about three hectares only which is within the exemption
limit of seven hectares for each landowner provided under P.D. No. 27.
Article 749 of the Civil Code provides inter alia that "in order that the donation of an
immovable may be valid, it must be made in a public document, specifying therein the
property donated and the value of the charges which the donee must satisfy." Corollarily,
Article 709 of the same Code explicitly states that "the titles of ownership, or other rights
over immovable property, which are not duly inscribed or annotated in the Registry of
Property shall not prejudice third persons." From the foregoing provisions, it may be
inferred that as between the parties to a donation of an immovable property, all that is
required is for said donation to be contained in a public document. Registration is not
necessary for it to be considered valid and effective. However, in order to bind third
persons, the donation must be registered in the Registry of Property (now Registry of Land
Titles and Deeds). Although the non-registration of a deed of donation shall not affect its
validity, the necessity of registration comes into play when the rights of third persons are
affected, as in the case at bar. ACEIac

It is actually the act of registration that operates to convey registered land or affect title
thereto. Thus, Section 50 of Act No. 496 (Land Registration Act), as amended by Section
51 of P.D. No. 1529 (Property Registration Decree), provides:
SECTION 51. Conveyance and other dealings by registered owner — . . . But
no deed, mortgage, lease, or other voluntary instrument, except a will purporting to
convey or affect registered land, shall take effect as a conveyance or bind the
land, but shall operate only as a contract between the parties and as evidence of
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 authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land
insofar as third persons are concerned, . . .

Further, it is an entrenched doctrine in our jurisdiction that registration in a public registry

creates constructive notice to the whole world (Olizon vs. Court of Appeals, 236 SCRA 148
[1994]). Thus, Section 51 of Act No. 496, as amended by Section 52 of P.D. No. 1529,
provides:
SECTION 52. Constructive notice upon registration — Every conveyance,
mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting
registered land shall, if registered, filed or entered in the Office of the Register of
Deeds for the province or city where the land to which it relates lies, be
constructive notice to all persons from the time of such registering, filing or
entering.

It is undisputed in this case that the donation executed by Ignacio Gonzales in favor of his
grandchildren, although in writing and duly notarized, has not been registered in
accordance with law. For this reason, it shall not be binding upon private respondents who
did not participate in said deed or had no actual knowledge thereof. Hence, while the deed
of donation is valid between the donor and the donees, such deed, however, did not bind
the tenants-farmers who were not parties to the donation. As previously enunciated by this
Court, non-registration of a deed of donation does not bind other parties ignorant of a
previous transaction (Sales vs. Court of Appeals, 211 SCRA 858 [1992]). So, it is of no
moment that the right of the tenants-farmers in this case was created by virtue of a decree
or law. They are still considered "third persons" contemplated in our laws on registration,
for the fact remains that these tenants-farmers had no actual knowledge of the deed of
donation.
From the foregoing, the ineluctable conclusion drawn is that the unregistered deed of
donation cannot operate to exclude the subject land from the coverage of the Operation
Land Transfer of P.D. No. 27, which took effect on October 21, 1972. To rule otherwise
would render ineffectual the rights and interests that the tenants-farmers immediately
acquired upon the promulgation of P.D. No. 27, especially so because in the case at bar,
they have been cultivating the land even before World War II. Accordingly, the Certificates
of Land Transfer and the Emancipation Patents respectively issued to private respondents
over the land in question cannot be cancelled. It should be noted that one of the
recognized modes of acquiring title to land is by emancipation patent which aims to
ameliorate the sad plight of tenants-farmers. By virtue of P.D. No. 27, tenants-farmers are
deemed owners of the land they till. This policy is intended to be given effect by a
provision of the law which declares that, "the tenant-farmer, whether in land classified as
landed estate or not, shall be DEEMED OWNER of a portion constituting a family size farm
of five (5) hectares if not irrigated and three (3) hectares if irrigated" (P.D. No. 27, third
paragraph). It may, therefore, be said that with respect to Lot 551-C, private respondents
became owners thereof on October 27, 1972, the day P.D. No. 27 took effect.

The second error assigned deals with a question of fact. We have consistently ruled that it
is not the function of this Court to assess and evaluate the evidence all over again, its
jurisdiction being generally limited to reviewing errors of law that might have been
committed by the lower court. Nevertheless, since the factual findings of the Court of
Appeals are at variance with those of an administrative agency such as the Department of
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 Agrarian Reform, we are compelled to review the records presented both in the Court of
Appeals and the said Department (Deiparine vs. Court of Appeals, 299 SCRA 668 [1998]).
Moreover, in the exercise of sound discretion and considering the fact that the parties have
relentlessly pursued this case since 1974 or for a period of 27 years already, this Court has
opted to look into the factual bases of the assailed decision of the Court of Appeals.
Petitioners maintain that private respondents knew of the donation as evidenced by the
affidavit and testimony of Francisco Villanueva and Abad Dela Cruz. This contention is
unacceptable. Villanueva testified that as the overseer of Ignacio Gonzales, he was tasked
to inform his co-tenants about the donation. However, the records show that Villanueva
has transferred his right to cultivate the land to a certain Bernardo Esguerra as early as
1965 (p. 203, Rollo), leading one to logically conclude that Villanueva was no longer a
tenant, much more an overseer, when the donation was executed in 1972. On the other
hand, Dela Cruz, in an Affidavit executed on May 28, 1992, denied testifying before Atty.
Romeo Bello at the Office of the Department of Agrarian Reform to the effect that he and
his co-tenants were aware of the donation. He declared that he had no knowledge of the
donation made by Ignacio Gonzales, nor did he have any idea that an investigation was
conducted by DAR on said matter (pp. 204-205, Rollo).
Likewise, petitioners claim that private respondents had been sharing their produce with
the donees or the grandchildren of Ignacio Gonzales, suggesting thereby that private
respondents have recognized the donees as the new owners of the land. Again, we find
this argument to be unfounded. The evidence on record reveals that the tenants-farmers
paid their rentals to Ignacio Gonzales and not to the grandchildren (pp. 150-194, Rollo).
Petitioners contend that the deed of donation was not registered because of the pendency
of the intestate proceedings. This argument was correctly rejected by the Court of
Appeals, in this wise:
We do not agree with respondents that the failure to register the deed of donation
was due to the pendency of the intestate proceedings and the fact that the
property had been mortgaged to the Philippine National Bank (PNB), because the
pendency of the intestate proceedings and the real estate mortgaged to the PNB,
do not preclude the registration annotation of the donation at the back of the
certificate of title covering the land.
(p. 4, Court of Appeals Decision.)

Thus, we affirm the conclusion of the appellate court that the land subject of the donation
is covered by Operation Land Transfer. The findings of fact made by the Court of Appeals
are conclusive and binding on the Supreme Court even if contrary to these of the trial court
or the administrative agency, so long as such findings are supported by the records or
based on substantial evidence (Tabaco vs. Court of Appeals, 239 SCRA 485 [1994]). While
the foregoing doctrine is not absolute, petitioners have not sufficiently proved that the
findings complained of are totally devoid of support in the records, or that they are so
glaringly erroneous as to constitute serious abuse of discretion.
As a final note, our laws on agrarian reform were enacted primarily because of the
realization that there is an urgent need to alleviate the lives of the vast number of poor
farmers in our country. Yet, despite such laws, the majority of these farmers still live on a
hand-to-mouth existence. This can be attributed to the fact that these agrarian laws have
never really been effectively implemented. Certain individuals have continued to prey on the
disadvantaged, and as a result, the farmers who are intended to be protected and uplifted
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 by the said laws find themselves back in their previous plight or even in a more distressing
situation. This Court ought to be an instrument in achieving a dignified existence for these
farmers free from pernicious restraints and practices, and there's no better time to do it
than now.
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals dated March
15, 1993 in CA-G.R. SP No. 26416 is hereby AFFIRMED.
SO ORDERED.
Vitug, Panganiban, Gonzaga-Reyes and Sandoval-Gutierrez, JJ., concur.

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