Banawa vs. Mirano

A person who purchases land with money validly donated to her owns the land; the donors cannot reclaim it through implied trust or prescription absent just title. Conversely, a registered vendee who possesses the land actually, openly, publicly, continuously, and adversely for ten years under the Code of Civil Procedure acquires ownership by prescription.

Maria Mirano was a niece of Juliana Mendoza who, from about age nine in 1911, was taken into the childless household of Doroteo Banawa and Juliana Mendoza in Taal, Batangas, and reared as their own child. The spouses later operated a general merchandise store and acquired several parcels of land. Maria died on July 31, 1949, survived by her sister Primitiva Mirano and the children of her deceased brother Martin Mirano—Gregoria, Juana, and Marciano—who are the respondents. The dispute concerns two sugar lands, the Iba and Carsuche properties, originally titled in Maria’s name, and the legal effect of the old Civil Code, the New Civil Code, and the Code of Civil Procedure on the parties’ claims.

Maria Mirano, a niece of Juliana Mendoza, was taken in sometime in 1911, when she was about nine years old, into the household of the childless spouses Doroteo Banawa and Juliana Mendoza in Mahabang Lodlod, Taal, Batangas. The spouses treated and reared her like their own child, hired a private tutor to teach her reading, writing, and arithmetic, and supported her with money, clothes, and jewelry; Maria reciprocated by helping with household chores. A few years later, the spouses opened a general merchandise store in barrio Lutucan, Sariaya, Quezon, which produced considerable income and enabled them to acquire several parcels of land. On July 31, 1949, after a lingering illness, Maria died in Taal, Batangas while still living with the spouses. She left as her only nearest relatives her surviving sister Primitiva Mirano and Gregoria, Juana, and Marciano, all surnamed Mirano, the children of her deceased brother Martin Mirano; these relatives are the respondents.

The parties do not dispute the identity of the two parcels in controversy. The first, the Iba property, is a sugar land in Barrio Iba, Taal, Batangas, with an area of 44,200 square meters, more or less, covered by Tax Declaration No. 25994 in the name of Maria Mirano and assessed at P2,210. The second, the Carsuche property, is a sugar land in Barrio Carsuche, Taal, Batangas, with an area of 54,093 square meters, more or less, covered by Tax Declaration No. 19786 in the name of Maria Mirano and assessed at P2,760.

The Iba property was originally owned by Placido Punzalan. According to the plaintiffs’ evidence, it was acquired on May 5, 1921 by a deed of sale contained in a public instrument acknowledged before Notary Public Ramon A. Cabrera; a photostatic copy, Exhibit A, was secured from the Division of Archives, Bureau of Libraries. The deed stated that the Iba property formerly consisted of two parcels and that they were sold for P2,000 in favor of Maria Mirano. Doroteo Banawa impliedly admitted the execution of this notarial document when he declared that the notary public charged him P20 and another P5 for stamps in the name of Maria Mirano since 1923, as shown by Exhibits A-1 to A-7. The defendants, by contrast, claimed that the money used to buy the Iba property belonged to the spouses. They asserted that since 1919 Placido Punzalan had borrowed P1,200, P1,800, and P1,080 from the spouses, evidenced by Exhibits 1, 2, and 3; that upon his failure to pay in 1921, he agreed to sell the land to the spouses for P3,700; and that because the total loans were P4,080, Punzalan reimbursed the P380 difference. The document allegedly stated the price as only P2,000 because Doroteo Banawa had only P25 with him and the notary charged P10 for every P1,000 of consideration. The defendants further maintained that the sale was made in Maria Mirano’s name because the spouses, already old, wanted to leave something for Maria, but that they made Maria understand that they would continue to own, administer, and enjoy the fruits of the property while alive and that she would become owner only after their death. Maria Mirano was 19 years old when the deed of sale was executed.

The Carsuche property was acquired by purchase from its original owners, Roman Biscocho, his sister Paula Biscocho, and sister-in-law Carmen Mendoza, sometime in December 1935. The parties sharply disputed the form of the document and the vendee. The plaintiffs claimed that the sale was evidenced by a public instrument executed before and ratified by Notary Public Vicente Ilagan of Taal, Batangas, and that the vendee was Maria Mirano. The defendants asserted that the sale was evidenced by a private writing prepared in the handwriting of Roman Biscocho and that it was in favor of the spouses Doroteo Banawa and Juliana Mendoza. Neither the public instrument nor the private writing was presented before the lower court. After laying the proper predicate for secondary evidence, the plaintiffs presented Atty. Vicente Ilagan and Roman Biscocho. They testified that sometime in December 1935, the spouses Doroteo Banawa and Juliana Mendoza, Maria Mirano, Roman Biscocho, Paula Biscocho, and Carmen Mendoza, accompanied by Atty. Regino Aro, went to the office of Atty. Ilagan in Taal, Batangas; that Atty. Aro, a classmate of Atty. Ilagan in law school, asked permission to use the latter’s typewriter, on which he prepared a document in English and which he asked Atty. Ilagan to ratify; that Atty. Ilagan translated the contents into Tagalog to the parties and witnesses, after which all signed; that the document involved the sale of the Carsuche property in favor of Maria Mirano; and that after paying P20 for his services, which Atty. Ilagan at first refused, Doroteo Banawa asked in Tagalog whether the document he ratified was “strong enough” (Matibay) to safeguard the rights of Maria Mirano, to which Atty. Ilagan answered in the affirmative. Doroteo Banawa, on the other hand, stated that when the owners offered the Carsuche property, they agreed on a purchase price of P3,700, of which a down payment of P1,200 was made and later an additional P100 was given to Roman Biscocho, both payments evidenced by a receipt dated December 15, 1936, Exhibit 9. A few days later, Roman Biscocho prepared in his own handwriting a private document selling the Carsuche property in favor of the spouses Doroteo Banawa and Juliana Mendoza for P4,000, the vendors having asked for a P300 increase in price. Doroteo Banawa thereafter brought the private document to the municipal treasurer of Taal, Batangas, to whom he expressed the desire to have the land declared in the name of Maria Mirano so that she might attend to the payment of taxes whenever he was away; this was done by his thumb-marking an affidavit, thus accounting for the fact that the land appeared in Maria Mirano’s name in the tax declarations covering the same from 1934 to 1956.

In 1940, the same Carsuche land was sold to petitioners Doroteo Banawa and Juliana Mendoza by a deed of sale dated April 4, 1940, executed by Roman Biscocho, Paula Biscocho, and Maria Carmen Mendoza, evidenced by Exhibit E and registered in the Registry of Deeds of Batangas; the petitioners immediately entered into possession of the land as owners. On August 7, 1956, the spouses Doroteo Banawa and Juliana Mendoza executed a deed of donation, Exhibit D, in favor of the spouses Casiano Amponin and Gliceria Abrenica, and Tax Declarations No. 26818 in the names of the Banawa spouses and No. 26845 in the names of the Amponin spouses were issued. The trial court found that the two parcels, with a combined area of a little less than ten hectares, had an average annual net yield of P500, and it awarded P4,500 actual damages because Maria Mirano had been dead for nine years when the trial court decision was rendered. The Court of Appeals found that there was a sale of the Carsuche property in 1935 in favor of Maria Mirano embodied in a public instrument, but also that in 1940 the same land was sold to petitioners, that the sale was duly registered, and that petitioners immediately entered into possession as owners.

• Donation Inter Vivos: Petitioners argued that the Court of Appeals gravely erred in ruling that the placing of the Iba property in the name of Maria Mirano was in the nature of a donation inter vivos.
• Article 632, Old Civil Code: Petitioners maintained that the Court of Appeals erred in ruling that their interpretation of Article 632 of the Old Civil Code was too literal and ignored the rationale of the legal provision; they argued that an oral donation of personal property requires simultaneous delivery of the gift, and that there was no simultaneous delivery of the credits to Maria Mirano.
• Article 1448, New Civil Code: Petitioners argued that the Court of Appeals erred in ruling that the exceptive clause of Article 1448 of the Civil Code was applicable in the present case.
• Rule 100, Section 5, Old Rules of Court: Petitioners argued that the Court of Appeals erred in ruling that Section 5, Rule 100 of the Old Rules of Court did not apply because Maria Mirano was not legally adopted; they submitted that extrajudicial adoption is within the contemplation and spirit of the rule of reversion adoptive.
• Carsuche Deed of Sale: Petitioners argued that the Court of Appeals erred in ruling that the deed of sale executed in 1940 in favor of petitioners Doroteo Banawa and Juliana Mendoza, and duly registered, did not impair the pretended sale to Maria Mirano.
• Simulated Contracts: Petitioners contended that the deeds of sale executed by the owners of the land in favor of Maria Mirano were simulated contracts intended to shortcut two different transactions: a sale in favor of the spouses Doroteo Banawa and Juliana Mendoza, and a donation of lands by the spouses in favor of Maria Mirano.
• Acquisitive Prescription: Petitioners claimed ownership by acquisitive prescription under Article 1957 of the Old Civil Code and Section 41 of the Code of Civil Procedure over the Iba property, and by prescription over the Carsuche property under Section 40 of the Code of Civil Procedure.

• Ownership as Heirs: Respondents asserted title to the lands as heirs of Maria Mirano.
• No Categorical Donation Inter Vivos: Respondents pointed out that neither the Court of Appeals nor the Court of First Instance of Batangas categorically stated that the placing of the properties in the name of Maria Mirano was in the nature of a donation inter vivos.
• Sale to Maria Mirano: Respondents claimed that the Iba property was sold to Maria Mirano and that the Carsuche property was sold in December 1935 in favor of Maria Mirano, embodied in a public instrument ratified by Notary Public Vicente Ilagan.
• Secondary Evidence of Carsuche Sale: Respondents presented Atty. Vicente Ilagan and Roman Biscocho to testify that the 1935 Carsuche sale was in favor of Maria Mirano and that Doroteo Banawa asked whether the document was strong enough to safeguard Maria Mirano’s rights.

• Iba Property — Ownership and Nature of Transfer: Whether the placing of the Iba property in the name of Maria Mirano was a donation inter vivos or mortis causa, and whether ownership vested in her.
• Article 632, Old Civil Code: Whether the oral donation of personal property, consisting of the credits or money used to buy the Iba property, required simultaneous delivery, and whether constructive delivery satisfied that requirement.
• Article 1448, New Civil Code: Whether the implied trust provision of Article 1448 of the New Civil Code applied to transactions executed before the effectivity of the New Civil Code.
• Rule 100, Section 5, Old Rules of Court: Whether the donor spouses were entitled to the Iba property under Section 5, Rule 100 of the Old Rules of Court despite Maria Mirano not having been legally adopted.
• Carsuche Property — Prescription: Whether petitioners acquired the Carsuche property by acquisitive prescription under the Code of Civil Procedure, and whether the 1940 registered sale in their favor impaired the alleged 1935 sale to Maria Mirano.
• Damages: Whether the award of actual damages and attorney’s fees should be adjusted in light of the disposition of the two parcels.

• Iba Property — Ownership and Nature of Transfer: Affirmed. The Iba property belonged to Maria Mirano; the transfer was not a donation mortis causa, and the money used to buy it was validly donated to her. The documents were genuine sales to Maria, and petitioners were estopped from denying that intent.
• Article 632, Old Civil Code: No error. Verbal donation of personal property requires simultaneous delivery, but constructive delivery of the credits sufficed when the spouses consented to the deed of sale in Maria Mirano’s favor.
• Article 1448, New Civil Code: Not applicable. The transactions occurred before August 30, 1950, and no implied trust was shown.
• Rule 100, Section 5, Old Rules of Court: Not applicable. The rule covers only a judicially adopted child; Maria Mirano was not legally adopted.
• Carsuche Property — Prescription: Reversed. The Banawa spouses acquired the Carsuche property by prescription; the 1957 action was filed more than ten years after the 1940 registered sale, and possession ripened into ownership in 1950.
• Damages: Modified. Actual damages were reduced to P6,975 for the Iba property’s net income over thirty-one years at P225 per year; attorney’s fees were fixed at P1,000.

• Iba Property — Ownership and Nature of Transfer: The Court of First Instance found, and the Court of Appeals sustained, that what the spouses donated to Maria Mirano was the money used to purchase the lands; Macario B. Aro testified that the money Maria used for the Iba and Carsuche properties was given by Doroteo Banawa. Because the money belonged to Maria, her purchase and payment made her the owner; the deed of sale, Exhibit A, recited that Maria Mirano paid the P2,000 consideration. The claim that the deeds were simulated contracts failed because there was no deception, fraud, or concealment of intent; the transactions were simply donations of money or credits followed by Maria’s purchases. Petitioners were present at the sales and caused the titles to be placed in Maria’s name because they wished that after their death Maria would have something for her maintenance; Notary Ilagan’s testimony that Doroteo asked whether the document was “strong enough” for Maria confirmed this intent. Their conduct estopped them from denying that Maria was the true vendee, and the documents were what they purported to be—sales to Maria. The implied trust theory under Article 1448 of the New Civil Code was unavailable because the transactions predated August 30, 1950, and there was no showing that Maria bought in trust for petitioners. As to prescription, Article 1957 of the Old Civil Code required a just title, which petitioners did not prove for the Iba property; Article 1954 provided that just title must be proven and cannot be presumed. Under Section 41 of the Code of Civil Procedure, Maria possessed the Iba property as owner while alive, and petitioners’ adverse possession began only after her death in July 1949; only eight years elapsed before the 1957 action, less than the ten-year period. Thus the Iba property remained with Maria’s heirs.
• Article 632, Old Civil Code: Petitioners argued that the oral donation of personal property required simultaneous delivery and that there was no simultaneous delivery of the credits. This was rejected. Delivery may be actual or constructive, and constructive delivery includes acts that law treats as equivalent to real delivery. The oral donation of the pre-existing obligations of Placido Punzalan was simultaneous or concurrent with their constructive delivery to Maria when the spouses consented to the execution of the deed of sale of the Iba property in her favor. The execution of that deed constituted payment by Punzalan of his outstanding obligations to the spouses, and thus transferred possession of the incorporeal rights to Maria. The donation was therefore valid.
• Article 1448, New Civil Code: Because the transactions took place before the New Civil Code became effective on August 30, 1950, Article 1448 had no retroactive application. The Court found it unnecessary to discuss the third assigned error further. There was also no showing that Maria bought the lands in trust for the petitioners.
• Rule 100, Section 5, Old Rules of Court: The petitioners urged that the donor spouses were entitled to the Iba land under Section 5, Rule 100 of the Old Rules of Court, but the rule specifically provides for the case of a judicially adopted child. Maria Mirano was not legally adopted. Since the language of the law is clear and unequivocal, it must be taken to mean exactly what it says.
• Carsuche Property — Prescription: The Court of Appeals found a 1935 sale of the Carsuche property in favor of Maria Mirano embodied in a public instrument, but also found that in 1940 the same land was sold to petitioners, duly registered, and that they immediately entered possession as owners. Petitioners’ claim of acquisitive prescription was meritorious. Section 40 of the Code of Civil Procedure required an action for recovery of title to or possession of real property to be brought within ten years after the cause of action accrued. Under Article 1116 of the New Civil Code, prescriptions already running before the New Civil Code were governed by the laws previously in force. The prescriptive period began in 1940, when the sale in favor of the Banawas was registered, so the Code of Civil Procedure governed. The action was filed only in 1957, seventeen years later, and had prescribed in 1950. The Banawas’ possession ripened into full ownership in 1950, ten years after 1940, because it was actual, open, public, continuous, under a claim of title exclusive of any other right, and adverse to all other claimants under Section 41. Their successors continued that possession. The alleged bad faith of petitioners was of no consequence because Section 41 allowed prescription “in whatever way such occupancy may have commenced”; guilty knowledge did not prevent the acquisition of title by prescription. The Carsuche property therefore belonged to the Banawa spouses, who could validly donate it to the Amponin spouses.
• Damages: The trial court found that the two parcels, with a combined area of a little less than ten hectares, had an average annual net yield of P500, and it awarded P4,500 actual damages because Maria had been dead for nine years when the trial court decision was rendered. Because the Carsuche property belonged to petitioners, an adjustment was required. The Iba property was about 45% of the combined area; 45% of P500 was P225 per year. Maria had been dead for about thirty-one years, and during that period petitioners possessed the Iba property and received its products. They were ordered to pay P6,975 as actual damages, representing the net income for thirty-one years at P225 per year. Respondents were also entitled to P1,000 attorney’s fees.

• Ownership of property purchased with donated money — When money is validly donated to a donee, the money becomes the donee’s, and property purchased with it belongs to the donee. The Court applied this to the Iba property: the spouses donated the money or credits to Maria, who then purchased the land in her own name, so the land was hers.
• Simulated contracts — Contracts may be absolutely or relatively simulated; both are void for want of true consent, and simulation aims to conceal intent or defraud third persons. No simulation existed where the parties’ conduct and documents showed a real sale to Maria and no deception, fraud, or concealment.
• Equitable estoppel — A party whose conduct or representations led others to believe a certain state of facts cannot later deny that state of facts to their prejudice. Petitioners, who caused the titles to be placed in Maria’s name and represented her as vendee, were estopped from denying that the sales to Maria were the true intent of the parties.
• Implied trust under Article 1448, New Civil Code — An implied trust arises when property is sold and the legal estate is granted to one party but the price is paid by another for the beneficial interest of the latter, unless the transferee is a child of the payer. The provision was held inapplicable because the transactions occurred before the New Civil Code’s effectivity and no trust was shown.
• Acquisitive prescription of immovables under the Old Civil Code — Under Article 1957, ownership and real rights in immovable property prescribe by possession in good faith and under a just title for ten years between present persons and twenty years between absentees. Article 1954 requires that just title be proven and never presumed. Petitioners failed to prove just title for the Iba property, so prescription did not run.
• Prescription and adverse possession under the Code of Civil Procedure — Section 40 requires an action to recover title to or possession of real property to be brought within ten years after the cause of action accrues. Section 41 provides that ten years of actual, open, public, continuous, and adverse possession under a claim of title vests full ownership, regardless of how the occupancy commenced. The Banawas’ registered 1940 purchase and ten years of adverse possession ripened into ownership in 1950, barring the 1957 action as to Carsuche.
• Oral donation of personal property under Article 632, Old Civil Code — A verbal donation of personal property requires simultaneous delivery of the gift; absent that, it produces no effect unless made in writing and accepted in the same form. Delivery may be actual or constructive. Constructive delivery of the donated credits occurred when the spouses consented to the deed of sale in Maria’s favor.
• Reversion adoptive under Section 5, Rule 100, Old Rules of Court — The rule on reversion of property to the adoptive parents or their relatives applies only to a judicially adopted child. It does not extend to an extrajudicial or de facto adoption; Maria, not having been legally adopted, did not fall within the rule.
• Conclusiveness of Court of Appeals findings of fact — Findings of fact of the Court of Appeals are conclusive on the parties and the Supreme Court unless they fall under recognized exceptions, such as being grounded on speculation, manifestly mistaken, contrary to trial court findings, or without evidentiary basis. The Court found no exception in this case.

• "The documents are what they purport to be — contracts of sale from the vendors to the vendee, Maria Mirano." — This states the ratio decidendi for the Iba property: the Court rejected the simulated-contract theory and confirmed that the deeds genuinely conveyed the land to Maria Mirano.
• "The possession of the Banawas over the Carsuche property ripened into full ownership in 1950, ten (10) years after 1940, when the possession of the petitioner-spouses which was actual, open, public and continuous, under a claims of title exclusive of any other right and adverse to all other claim commenced. (Sec. 41, Code of Civil Procedure)." — This is the controlling formulation for the Carsuche property, grounding the reversal on acquisitive prescription under the Code of Civil Procedure.
• "In the instant case, the oral donation of the gift consisting of pre-existing obligations of the vendor, Placido Punzalan, was simultaneous or concurrent with the constructive delivery thereof to Maria Mirano when the spouses consented to the execution of the deed of sale of the Iba property in favor of Maria Mirano." — This defines how Article 632 of the Old Civil Code was satisfied through constructive delivery of the donated credits.
• "The rule involved specifically provides for the case of the judicially adopted child. It is an elementary rule of construction that when the language of the law is clear and unequivocal, the law must be taken to mean exactly what it says." — This states the Court’s reason for rejecting the reversion-adoptive claim under Section 5, Rule 100 of the Old Rules of Court.

• Tolentino vs. de Jesus, et al., 56 SCRA 167, 171-172 (March 27, 1974) — Cited for the rule that findings of fact of the Court of Appeals are conclusive on the parties and the Supreme Court except in enumerated circumstances; the Court found none of the exceptions applied.
• Rollo, et al. vs. Claro and Baquiring, 91 Phil. 250 — Cited in connection with the holding that Article 1448 of the New Civil Code did not apply retroactively to the transactions.
• Arboso vs. Andrade, 87 Phil. 782 — Cited for the rule that guilty knowledge is of no moment and that title by prescription may be acquired in whatever way possession may have been commenced or continued, provided possession was open, public, continuous, and under a claim of title for over ten years.

• Article 632, Old Civil Code — Donations of personal property may be made verbally or in writing; verbal donation requires simultaneous delivery, otherwise it produces no effect unless made in writing and accepted in the same form. Applied to uphold the oral donation of credits or money to Maria through constructive delivery.
• Article 1448, New Civil Code — Creates an implied trust when property is sold and the legal estate is granted to one party but the price is paid by another for the beneficial interest of the latter, except when the transferee is a child of the payer. Held not applicable because the transactions predated the New Civil Code and no trust was shown.
• Article 1957, Old Civil Code — Ownership and other real rights in immovable property prescribe by possession in good faith and under a just title for ten years between present persons and twenty years between absentees. Applied to reject petitioners’ prescription claim over the Iba property.
• Article 1954, Old Civil Code — A just title must be proven and can never be presumed. Applied to the Iba property, where petitioners presented no just title.
• Section 41, Code of Civil Procedure — Ten years of actual adverse possession under a claim of title vests full and complete title, provided possession is actual, open, public, continuous, under a claim of title exclusive of any other right, and adverse to all other claimants. Applied to hold that the Banawas acquired the Carsuche property by prescription in 1950.
• Section 40, Code of Civil Procedure — An action for recovery of title to or possession of real property can only be brought within ten years after the cause of action accrues. Applied to hold that the 1957 action was barred as to the Carsuche property.
• Article 1116, New Civil Code — Prescriptions already running before the effectivity of the New Civil Code are governed by the laws previously in force. Applied to make the Code of Civil Procedure govern the Carsuche prescription.
• Section 5, Rule 100, Old Rules of Court — In case of the death of the child, his parents and relatives by nature, and not by adoption, shall be his legal heirs, except as to property received or inherited by the adopted child from either of his parents by adoption, which shall become the property of the latter or their legitimate relatives. Held to apply only to a judicially adopted child; Maria was not legally adopted.
• Article 1433, New Civil Code — Cited by the Court in support of its statement that petitioners were equitably estopped from denying that the transfer of the lands to Maria Mirano was the actual and true intent of the parties.

• Guerrero, De Castro and Melencio-Herrera, JJ., concur.
• Teehankee (Chairman), concurs in the result.

• Justice Makasiar — Concurring and dissenting. He dissented as to the Iba parcel because there was no valid donation of the land or of the purchase money. He stressed that the spouses would not donate P4,080 to Maria, who was merely tutored in the three R’s at their expense; no cash actually passed to Maria; the amount represented loans previously extended to Placido Punzalan; the purchase price was made to appear as P2,000 to save notarial fees; Maria lived with and was supported by the spouses until her death at 48; if a valid donation had been made, Maria could have purchased the Carsuche parcel herself, but the spouses paid for it; and the spouses legally adopted Gliceria Abrenica but never adopted Maria, though they could have done so. He concurred as to the Carsuche parcel because there was no valid sale to Maria: no copy of the alleged 1935 deed was presented even though a certified copy could have been secured from the Archives; Atty. Aro, who prepared the deed, did not notarize it; Maria, then 23, should have retained the original or a copy; the tax declarations did not state the reason for cancellation or the deed details; and there was no exhaustive examination of other possible sources of the deed.